Fifth Circuit: Mandatory Class Action Waivers Do Not Violate the NLRA

In a recent decision, the Fifth Circuit reaffirmed its positions that mandatory class action waivers do not violate Section 7 of the National Labor Relations Act (“NLRA”).

In Convergys Corp. v. NLRB, the Fifth Circuit stated that an employee’s right to a collective action is procedural, not substantive, and signing a waiver therefore did not violate any substantive rights under the NLRA.

In Convergys, the employer required all job applicants to sign a class action waiver, which was not in the context of an arbitration agreement. The National Labor Relations Board’s (“NLRB”) original decision in the matter was that the mandatory class action waiver violated Section 7 of the NLRA, which prohibits employers from interfering with an employee’s right to engage in protected concerted activities. The NLRB relied on a 2012 NLRB case (“Horton I”), even though the Fifth Circuit later denied enforcement of the Horton I decision in D.R. Horton, Inc. v. NLRB (“Horton II”).

Here, the Fifth Circuit stressed that the Horton II decision already rejected the NLRB’s position that Section 7 guarantees an employee the right to participate in class/collective actions. Even absent an arbitration agreement, the court stated that the Horton II decision still applied and class action waivers are permissible because they are “contractual provisions” that do not impede upon substantive rights.

The U.S. Supreme Court is currently reviewing class action waivers in arbitration agreements. It is unclear at this time whether the Supreme Court’s decision will have an impact on the unique circumstances of this case.