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February 17, 2016

NLRB Shrugs Off Court Rulings in Samsung Arbitration Decision

Here we go again. The National Labor Relations Board (NLRB) has once more unabashedly ignored judicial precedent in ruling against arbitration agreements in employment contracts.

This month, Samsung Electronics was ordered by the NLRB to cease using employee arbitration agreements that include class action waivers, claiming that such agreements are illegal under the National Labor Relations Act. This is similar to a case against the home builder D.R. Horton, where the NLRB also claimed their employee arbitration agreements with class action waivers are invalid.

The problem? In 2013, the U.S. Court of Appeals for the Fifth Circuit declared the NLRB’s Horton decision unenforceable, citing the Supreme Court’s decision in AT&T Mobility v. Concepcion which reinforced the legality of arbitration and class waivers.

As in the Horton case, the NLRB refused to acknowledge the Court’s decision and clear legal precedent in the Samsung case.

Even putting court rulings aside, the decision to strike down binding arbitration agreements in favor of class action lawsuits is at odds with with what the NLRB claims to support. Their website states that the NLRB “encourages parties to resolve cases by settlement rather than litigation whenever possible.”

Arbitration leads to better settlements for plaintiffs than costly and lengthy litigation. It is an incentive for companies to avoid lawsuits and as such, claimants often end up doing better in arbitration than in court.

With federal law against you, your own public acknowledgement of the favorability of avoiding litigation, and the proven benefits of arbitration, it seems like the NLRB lacks a leg to stand on. This ruling was perhaps more about the plaintiffs’ lawyers who stand to benefit than the Samsung employees.

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