Tag Archives: Mandatory Arbitration Agreements

The NLRB Still Has Something To Say About Mandatory Arbitration Agreements

Contributed by Steven Jados, November 5, 2019

In May 2018, the U.S. Supreme Court rejected the argument that the National Labor Relations Act (the “Act”) prohibits mandatory arbitration agreements that contain class and collective action waivers.  But that has not stopped the National Labor Relations Board (NLRB), the federal agency that enforces the Act, from weighing-in and declaring other arbitration agreement provisions unlawful.

As a string of recent NLRB decisions makes clear—the newest of which is Beena Beauty Holding, Inc., 368 NLRB No. 91 (2019)—mandatory arbitration provisions, even in non-union workplaces, that can reasonably be interpreted by employees to limit or interfere with their ability to file unfair labor practice charges with the NLRB are likely unlawful. 

The offending language, from the NLRB’s perspective, is one that generally requires arbitration of all claims relating to an employee’s employment, whether under state or federal law, without exception.  As the NLRB’s decisions show, it does not matter whether the Act or NLRB are specifically mentioned.  Rather, it is a violation of the Act if an arbitration agreement could reasonably be interpreted to prevent employees from filing charges with the NLRB.  In other words, provisions in an arbitration agreement that make arbitration the exclusive forum for violations of the Act are unlawful, whether such provisions are expressly stated or reasonably implied.    

Fortunately, the NLRB has also given insight as to what is acceptable under the Act.  In Briad Wenco, LLC, 368 NLRB No. 72 (2019), the NLRB ruled that the following “savings clause” rendered the employer’s arbitration provision lawful:  “Nothing in this Agreement shall be construed to prohibit any current or former employee from filing any charge or complaint or participating in any investigation or proceeding conducted by an administrative agency, including but not limited to  . . . the National Labor Relations Board . . . .” It is not enough, however, to include language stating that the arbitration provision does not apply to claims “preempted by federal labor laws.” The NLRB has already ruled that such language is insufficient under the Act.  Cedars-Sinai Medical Center, 368 NLRB No. 83 (2019).

Bearing all of this in mind, the bottom line is that even non-union employers should be aware that they—and their mandatory arbitration agreements—continue to be targeted by the NLRB. The addition of a savings clause like the one described in the preceding paragraph may help limit or eliminate the potential for NLRB scrutiny—but we note that arbitration provisions are construed as a whole, so it is best to consult with experienced labor counsel to ensure that arbitration agreements are drafted to limit potential liability and compliance concerns.  

Tech Industry Employees Protest for End to Mandatory Arbitration

Contributed by Michael Faley, January 24, 2019

Arbitration title on legal documents

In November, thousands of Google employees walked out of work in protest against the company’s practice of compelling mandatory arbitration in sexual harassment claims. Frequently referred to as “forced arbitration” in the context of the current debate, Google responded by modifying its new hire letters to make mandatory arbitration optional for sexual harassment and assault claims. Several other big-name tech companies followed suit and ended the practice for sexual harassment claims.   

Now on the heels of that initial success, tech industry employees are pushing for an end to all mandatory arbitrations for employee-related claims. Last week, protestors, organized under a group called Googlers for Ending Forced Arbitration, conducted a massive social media campaign pressing Google and other tech companies to eliminate their mandatory arbitration schemes for employee claims. Members of Googlers for Ending Forced Arbitration argue that mandatory arbitration schemes lack transparency and enable misconduct against employees. They view going to court as the solution, and demand that arbitration always be optional. In addition, they seek elimination of onerous confidentiality requirements and want an end to class-action waivers so employees can file similar claims together. 

So far, neither Google nor the other targeted tech giants have signaled a willingness to change their current mandatory arbitration schemes beyond the recent modification for sexual harassment claims. However, groups such as Googlers for Ending Forced Arbitration do not appear to be letting up either. Undoubtedly, the scope and general use of mandatory arbitration clauses will continue to be a hot topic of debate in 2019.

Are Mandatory Arbitration Agreements Headed for the Supreme Court?

Contributed by Carlos Arévalo, October 25, 2016

This past June, our blog reported on the Seventh Circuit’s decision in Lewis v. Epic Sys. Corp., 823 F.3d 1147 (7th Cir. 2016), which found that the Federal Arbitration Act does not require enforcement of an arbitration agreement based on the employee’s right under the National Labor Relations Act (NLRA) to engage in protected concerted activity. Specifically, in Lewis the Seventh Circuit held that employment arbitration agreements that include class action waivers violate the NLRA and cannot be enforced. This was the first time that a circuit court had adopted the NLRB’s position in D.R. Horton, Inc., 357 NLRB 184 (January 3, 2012).

Gavel2A couple of months later, the Ninth Circuit, in Morris v. Ernst & Young, LLP, (9th Cir. (Cal.) August 22, 2016), followed suit and also found that an arbitration agreement that required employees to bring claims in “separate proceedings,” thereby prohibiting class and collective actions, violated the employees’ right to engage in concerted activity under the NLRAJust like in Lewis, the employees in Morris had to sign arbitration agreements as a condition of employment. Stephen Morris subsequently filed a class and collective action against the company, alleging he and others had been misclassified as employees exempt from overtime under the Fair Labor Standards Act and California state law. In response, the employer filed a motion to compel arbitration pursuant to the agreements the employees had signed. The district court ordered individual arbitration for each and dismissed the complaint. The Ninth Circuit, however, reversed and held that such agreements interfere with the employees’ rights under Sections 7 and 8 of the NLRA regarding concerted activity.

Back in 2013, three circuit courts ruled that the NLRA does not prohibit class waivers. First, the Eighth Circuit ruled that class waivers were appropriate in Owen v. Bristol Care, Inc., 702 F.3d 1050 (8th Cir. 2013). The Second Circuit did likewise in Sutherland v. Ernst & Young, 726 F.3d 290 (2nd Cir. 2013).  Finally, the Fifth Circuit reversed the NLRB’s decision that such agreements were unenforceable in D.R. Horton, Inc. v. NLRB, 737 F.3d 344 (5th Cir. 2013). Then, in 2014 the Eleventh Circuit arrived at the same conclusion and upheld class waivers in Walthour v. Chipio Windshield Repair, LLC, 745 F.3d 1326 (11th Cir. 2014).

Certainly, this split among circuits makes it more likely that the Supreme Court will soon address whether employees will be able to waive their right to participate in collective actions if they choose to sign arbitration agreements. Indeed, petitions for writs of certiorari seeking review by the Supreme Court were filed in Lewis on September 2nd and in Morris on September 8th. How this issue is ultimately resolved, of course, depends largely on the outcome of the 2016 election.

Irrespective of who fills the vacancy left as a result of Justice Scalia’s passing, employers should still seek labor and employment counsel’s guidance with respect to arbitration agreements to determine if they are enforceable and/or if necessary revisions and amendments are required. Similarly, employers, with counsel’s assistance, should develop new strategies in light of potential changes that may be in the offing.