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.