Refusing to acknowledge court decisions to the contrary, the National Labor Relations Board (NLRB) has ruled once again that an employer that enforces a policy requiring its employees to waive their right to pursue class, collective, or representative actions in an arbitration or in court, is violating federal labor laws.
In two cases involving former employees of Florida-based MasTec, Inc., NLRB Administrative Law Judge Michael A. Rosas decided on August 31 that MasTec’s waiver policy illegally interfered with its employees’ exercise of their rights guaranteed by Section 7 of the National Labor Relations Act (NLRA). That federal statute guarantees employees “the right to self-organization, to form, join, or assist labor organizations, to bargain collectively through representatives of their own choosing, and to engage in other concerted activities for the purpose of collective bargaining or other mutual aid or protection.”
MasTec argued unsuccessfully that the right to engage in class or collective action litigation is not a protected “concerted activity” under Section 7 of the NLRA.
Rosas ordered MasTec to immediately rescind or revise its Dispute Resolution Policy, contained in its employee handbook. The company must inform all its employees that the agreement required of all employees to arbitrate workplace disputes does not constitute a legally binding waiver of their right to maintain employment related class or collective actions in an arbitration or in court on behalf of groups of aggrieved employees.
Two federal district judges in Orlando and Tampa had ruled in 2015 that MasTec’s arbitration requirement was valid, and dismissed two purported collective action lawsuits claiming payment of overtime wages by two groups of employees, requiring them to arbitrate their claims on an individual basis. The suits had been filed pursuant to the Fair Labor Standards Act (FLSA), respectively, by Jose Luis Sanchez and Moishe Ben Levison. Rosas concluded that MasTec violated federal labor law at the time that it filed each motion in federal court seeking to enforce its waiver policy and send the disputes to arbitration.
Judge Rosas concluded that he was required to ignore contrary court decisions and instead had to follow the NLRB’s own prior decision in the 2012 case of D. R. Horton, Inc. In that case, the Board had held that Section 7 of the NLRA creates a substantive right for employees to pursue collective actions and, thus, a required waiver of that right violates federal labor laws. The NLRB’s D. R. Horton decision was subsequently overruled in 2015 by the United States Circuit Court of Appeals for the Fifth Circuit in New Orleans. However, earlier this year, two other federal appeals courts, the Seventh and Ninth Circuits, approved of the Board’s D.R. Horton decision. The Second and Eighth Circuit Courts of Appeals, like the Fifth, have ruled that class action waivers are enforceable.
The U.S. Supreme Court has not decided the exact issue in an employment context. However, in a 2015 decision, the Court upheld a contract provision in DirectTV’s standard contract with its subscribers stating that in any dispute the customer could only assert a claim on an individual basis, and not with other customers in a collective class action. The DirecTV customer contract included a waiver of class arbitration, stating that “[n]either you nor we shall be entitled to join or consolidate claims in arbitration.” The Supreme Court ruled that the waiver was valid and legally enforceable.
“Until the Supreme Court says otherwise, an administrative law judge is bound to follow the Board’s controlling precedent finding class action waivers unlawful,” Rosas concluded.
On September 9, the NLRB filed a petition for certiorari review with the United States Supreme Court, asking it to decide whether or not arbitration agreements containing class waivers are legal and can be enforced. The petition seeks review of a 2015 order by the United States Circuit Court of Appeals for the Fifth Circuit in New Orleans which became final on May 23, 2016.
In that litigation the NLRB had concluded that Murphy Oil USA, Inc. had unlawfully required employees at an Alabama facility to sign an arbitration agreement waiving their right to pursue class and collective actions, but the appellate court reversed the Board’s ruling. Murphy Oil, headquartered in El Dorado, Arkansas, operates more than 1,000 gas stations in 21 States, including Florida.
“The validity of agreements that waive workers’ right under the National Labor Relations Act to proceed on a class or collective basis is a question of exceptional importance that warrants this Court’s review,” the NLRB said in its petition to the Supreme Court. Certiorari review is not automatic and is granted on a discretionary basis by the Supreme Court.
MasTec did not immediately announce whether it would comply with the NLRB’s decision or challenge it in court. Unless the U.S. Supreme Court or Congress deal with the waiver issue, it appears that the NLRB and the courts will continue interpreting the NLRA differently, leaving both employers and employees uncertain of what their rights and obligations are regarding class actions.
In a prior similar case in 2013, MasTec had previously had its class action waiver policy held to violate federal labor law by another NLRB administrative law judge, Joel P. Biblowitz, but the company was then successful in having that decision overruled by the Fifth Circuit Court of Appeals.
Meanwhile, in the Sanchez case, after the parties engaged in arbitration proceedings, they reached a settlement that was approved by U.S. District Judge Gregory A. Presnell on August 12. The Defendants in that lawsuit – MasTec and AT&T Digital Life, Inc. — agreed to pay six plaintiffs a total of $35,800.00 in damages, together with $35,561.457 in attorneys’ fees and $3,638.55 ion court costs.
The Levison lawsuit, in which DirecTV, Inc. is also a defendant together with MasTec, is still pending. In that case U.S. District Judge Richard A. Lazzara observed in an order in February that “every district court in the Eleventh Circuit [which covers Florida], including this Court, has rejected the argument that the right to bring a collective action is a non-waivable substantive right under the Fair Labor Standards Act. … While orders of the NLRB enjoy considerable deference, they are not binding precedent.”
MasTec, headquartered in the Miami suburb of Coral Gables, is a multinational company engaged in the business of performing engineering, procurement, construction, and maintenance of infrastructures for electric transmission and distribution, oil and natural gas pipelines, and communications systems, including the installation of satellite television systems, home security systems, home automation systems, and other related services. The Company, traded publicly on the New York Stock Exchange, currently estimates 2016 annual revenue to approximate $5.0 billion. MasTec is the second largest Hispanic-owned company in the United States, and has over 13,000 employees in North America.