HR Workforce Solutions
By Nonprofits, For Nonprofits
Question: May we add an arbitration clause prohibiting class action lawsuits to our employment contracts?
Answer: Yes. Until recently, courts were split on the issue and the National Labor Relations Board (NLRB) ruled that “it is a violation of federal labor law to require employees to sign arbitration agreements that prevent them from joining together to pursue employment-related legal claims in any forum, whether in arbitration or in court.”
However, in its May 2018 decision, the U.S. Supreme Court (SCOTUS) ended the split, overruled the NLRB, and held that arbitration agreements providing for individualized proceedings (thus banning class actions) are enforceable under the Federal Arbitration Act (FAA), and neither the FAA’s saving clause nor the National Labor Relations Act (NLRA) suggest otherwise.
As a result of SCOTUS’s decision, an employer may add an arbitration clause waiving class and collective actions to its employment contracts without fear of violating federal law due to the mere presence of the clause. However, it is essential that any employment contract — with or without an arbitration clause — comply with all applicable laws. Therefore, as always, we recommend seeking counsel to properly draft your arbitration agreement and for further guidance.
Q&A provided by ThinkHR, powering the UST HR Workplace for nonprofit HR teams. Have HR questions? Sign your nonprofit up for a free 30-day trial here.
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UST maintains a secure site. This means that information we obtain from you in the process of enrolling is protected and cannot be viewed by others. Information about your agency is provided to our various service providers once you enroll in UST for the purpose of providing you with the best possible service. Your information will never be sold or rented to other entities that are not affiliated with UST. Agencies that are actively enrolled in UST are listed for review by other agencies, UST’s sponsors and potential participants, but no information specific to your agency can be reviewed by anyone not affiliated with UST and not otherwise engaged in providing services to you except as required by law or valid legal process.
Your use of this site and the provision of basic information constitute your consent for UST to use the information supplied.
UST may collect generic information about overall website traffic, and use other analytical information and tools to help us improve our website and provide the best possible information and service. As you browse UST’s website, cookies may also be placed on your computer so that we can better understand what information our visitors are most interested in, and to help direct you to other relevant information. These cookies do not collect personal information such as your name, email, postal address or phone number. To opt out of some of these cookies, click here. If you are a Twitter user, and prefer not to have Twitter ad content tailored to you, learn more here.
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This Privacy Policy and the Terms of Use for our site is subject to change.
