Last week, the U.S. Sixth Circuit Court of Appeals found that Alternative Entertainment Inc. (AEI), a satellite television retailer operating in Michigan and Wisconsin, violated the National Labor Relations Act (NLRA) by forcing workers to sign arbitration agreements as a condition of employment, in an attempt to prevent them from participating in class action litigation against the company.
The decision is the most recent development in a case brought by the National Labor Relations Board (NLRB) on behalf of James DeCommer alleging unfair labor practices, DeCommer worked as a field technician for AEI, but was fired after he refused to comply with company managers’ instruction to not discuss compensation and salary information with co-workers. The complaint also claimed that his termination was in retaliation for complaining to his managers about a proposed change in AEI’s compensation.
The Sixth Circuit opinion highlighted a split among federal circuits regarding the validity of compulsory arbitration agreements containing class action waivers. In the 2012 case of D.R. Horton v. NLRB, the Fifth Circuit found that a provision similar to that instituted by AEI was enforceable. The Sixth disagreed with that decision, siding instead with the Seventh (Lewis v. Epic Systems Corp.) and Ninth (Morris v. Ernst & Young) Circuits, and holding that the NLRA “makes it illegal to force workers, as a condition of employment, to give up the right to concerted legal action, whether that right is substantive or procedural.”
As a result of the decision, Alternative Entertainment is required to rehire DeCommer with back pay and benefits, cease its use of the mandatory arbitration policy, and eliminate the rule that bars employees from disclosing or discussing salary and compensation information issues among themselves.
The attorneys in Sommers Schwartz Employment Litigation Group are committed to employees’ rights to participate in class action litigation involving wage and hour violations and workplace rights. We will continue to monitor developments in the federal courts.