Kentucky Supreme Court Limits Employers’ Ability to Enter Arbitration Agreements with Employees

By Marianna Michael

Within the first week of October, the Kentucky Supreme Court issued its opinion in Northern Kentucky Area Development District v. Snyder NO. 2015-CA-001167 (Ky. Aug. 27, 2018). The court faced the decision of whether the Federal Arbitration Act (“FAA”) preempted KRS 336.700. Ultimately, the court held that: (1) employers may not condition employment on entering into arbitration agreements and (2) the FAA does not preempt KRS 366.700(2).

In this case, Danielle Snyder brought suit against her former employer, the Northern Kentucky Area Development District (“NKADD”). NKADD is a public agency that provides social programs to eight Kentucky counties. It hired Snyder on the condition that she enter into an arbitration agreement. The agreement required Snyder to resolve all disputes with NKADD through arbitration and not through the courts. Snyder was given the option to reject the agreement within five days of accepting it, but the rejection would end her employment with the company. She accepted the condition and worked for NKADD until

Fifth Circuit Refuses to Grant NLRB a Hearing En Banc in DH Horton

By Edwin S. Hopson

The Fifth Circuit Court of Appeals has just denied the NLRB’s request for an en banc rehearing in DR Horton Inc.

In December, 2013, a panel of the Fifth Circuit rejected the Board’s finding that Section 7 of the Act prevented employers, as a condition of employment, from putting in place arbitration agreements that waived an employee’s right to pursue class claims in an arbitration forum. The Fifth Circuit panel ruled that the Board’s decision was not supported by the language in the National Labor Relations Act or its legislative history or purpose. The court also found that there was nothing in the Act that would override the application of the Federal Arbitration Act. Therefore the Board’s decision was in error because the Act does not prevent the enforcement of arbitration agreements of the type at issue.

So DH Horton is not the law anywhere in the Fifth Circuit. The Board may be considering petitioning the Supreme Court, as its next step.

 

Court Rejects NLRB’s D.H. Horton Decision Invalidating Limits on Class Arbitration

By Edwin S. Hopson

The U.S. Court of Appeals for the Fifth Circuit in a split decison in D.H. Horton v. NLRB, No. 12-60031, decided December 3, 2013, rejected the NLRB’s ruling that an agreement between employees and Horton requiring arbitration and prohibiting class or collective actions in arbitration was a violation of the National labor Relations Act.  That agreement also required that all employment related disputes be resolved individually through arbitration.  The Board panel of Pearce and Becker (Hayes had recused himself) had concluded that prohibiting employees from pursuing class or collective action claims in arbitration infringed on substantive rights under Section 7 of the Act. It also held that the agreement discouraged employees from filing charges with the Board.

The court in rejecting the Board’s position on class or collective actions focused on the Federal Arbitration Act which favors arbitration.  After a detailed analysis of the NLRB’s arguments as to why the NLRA should govern, rather than the FAA, the court concluded that the Board’s arguments lacked merit.  However, the court did enforce the Board’s order pertaining to discouragement of employees from filing charges with the Board.

The court also rejected challenges to the underlying Board decision based on the invalidity of Member Becker’s recess appointment and the timing of the expiration of his recess appointment.

The full text of the decision can be found at:

http://www.ca5.uscourts.gov/opinions/pub/12/12-60031-CV0.pdf