NLRB Finds Arbitration Provision Violative of NLRA

D.R. Horton, a homebuilder with operations in more than 20 states, began to require each new and current employee to execute a "Mutual Arbitration Agreement" (MAA) as a condition of employment, requiring arbitration of all claims on a individual basis, precluding them from filing joint, class or collective claims addressing their wages, hours, or other working conditions against the employer in any forum. 

Upon review by the NLRB, it concluded that the MAA violated the National Labor Relations Act, specifically Section 7, that protects the rights of employees to "engage in . . . concerted activities for the purpose purpose collective bargaining or other mutual aid" and "to refrain from any and all such activities." The Board found that the employer, by making the MAA a condition of the employment, explicitly restricted activities that were protected by Section 7 of the NLRA, as the Board found that this section protects employees who join together to bring claims on a classwide basis are protected under Section 7.

This decision applies only to employees as defined in the NLRA, and has no impact on managers, supervisors, or independent contractors who are not covered under the NLRA. There are strict state and federal rules governing arbitration agreements.