Fifth Circuit Sides with Employers in Arbitration

By Linda H. Evans,
Senior Associate.


Hot off the Press!   According to a ruling on December 3, 2013, by the Fifth Circuit U.S. Court of Appeals, employers can require their workers to sign arbitration agreements waiving all rights to class-action lawsuits over workplace grievances.  This ruling overturns a National Labor Relations Board (NLRB) decision last year that found such agreements conflicted with federal law giving workers the right to pursue collective action to complain about workplace conditions.  This new decision is a win for businesses that want to limit legal exposure from the high costs of class-action lawsuits over unpaid overtime and other wage violations.  The case stemmed from a Ft. Worth homebuilder which required all its employees to sign agreements to resolve any workplace disputes in individual arbitration proceedings rather than sue.  The agreements also prevented an arbitrator from granting relief to employees as a class or group.  An NLRB spokesperson said the agency is reviewing the decision from the Fifth Circuit and it could file an appeal to the Supreme Court.  So we may not have the final word on this yet.


Arbitrations can be very useful for employers, but they are not without their problems.  Before you rush to require your employees to sign arbitration agreements, give us a call so we can review the good and bad sides of arbitration with you.