D.R. Horton Wins a Huge Employment Case. But . . .

D.R. Horton won a long-sought victory in the Fifth U.S. Circuit Court of Appeals today that forces its workers into arbitration to adjudicate their employment disputes, rather than going to court.

The decision, involving the National Labor Relations Act, involves the ability of employees to band together--in this instance, class actions rather than union organizing--against their employer. 

The decision affects employees at all levels of the business world, from the union shop up to the white collar executive suites.

The nation's largest home builder, based in Fort Worth, Texas, dodged a bullet in having the federal court invalidate a ruling by the National Labor Relations Board that would have forced it to litigate claims.

But the NLRB will seek a hearing from the U.S. Supreme Court in the case. 

The nation's top court has sought to enforce arbitration agreements in recent years, and cut back on the ability to demand class actions.  Employee advocates familiar with the case often say that Congress will need to intervene to preserve court access--and class rights, which also provide potential big returns for plaintiffs' lawyers--because the Court will strike down such demands. 

The D.R. Horton wrinkle is that the case involved the federal labor laws.  The Supreme Court had enforced mandatory arbitration against a variety of state statutes and in consumer cases before, but the employment arena and the National Labor Relations Act enforcing it is new turf for application of the Federal Arbitration Act.

The NLRB had interpreted employees' rights to join together to file suit against their employer as fitting under NLRA Sections 7 and 8 provisions allowing workers to take "concerted action" to deal with their employers, and preferred the NLRA to the Federal Arbitration Act. 

The NLRB found that D.R. Horton had committed an unfair labor practice by barring an executive from joining with other similarly situated employees in charging that the company had misclassified him with regard to overtime wages.

D.R. Horton in 2006 instituted a mandatory company-wide arbitration agreement to address its 3,000 employees' problems, barring litigation.

"Neither the NLRA’s statutory text nor its legislative history contains a congressional command against application of the [Federal Arbitration Act]," the Fifth Circuit found. "Therefore, the Mutual Arbitration Agreement should be enforced according to its terms unless a contrary congressional command can be inferred from an inherent conflict between the FAA and the NLRA’s purpose."

The Court found none, and overturned the federal agency's decision.

You can read the decision here.

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