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24 Hour Fitness' Contract Arbitration Clause Deemed Illegal by NLRB

Thursday, May, 3, 2012


The fitness franchise, 24 Hour Fitness, is under a lot of heat from the National Labor Relations Board (NLRB) because in their standard employment contract, arbitration and litigation by class action is strictly prohibited. According to the NLRB, this is a violation of federal law, specifically the National Labor Relations Act, or NLRA.


Why the Employment Arbitration Investigation Began

 

According to the NLRB, the investigation into 24 Hour Fitness began resulting from a litigation made by one of 24 Hour Fitness' employees in San Ramon, CA, where the company is based. The charge made by the employee stated that at least since the summer of 2010, the fitness center franchise has asserted this policy against class action in several lawsuits brought by its employees.

 

Seven of these cases were specifically cited in this litigation. In all seven mentioned cases, the NLRB noted that these were claims that necessitated class-action, as they were universal workplace issues, such as wage-and-hour violations. In each of these cases, the NLRB also noted that 24 Hour Fitness used the policy to attempt to compel the employees to change their collective actions into individual arbitration claims.


NLRB Calls for Hearing to Allow Class Action Legal Arbitration

 

The NLRB's complaint will be heard by an administrative law judge on June 11. They are specifically seeking to require the company to remove the contract arbitration clause from their handbooks and to cease maintaining and enforcing the class-action ban. The NLRB also requests that 24 Hour Fitness be mandated to inform all the arbitral and judicial forums where they have opposed class action. It does not appear that they will not seek fines or other punitive measures.