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Arbitration Agreements Must Not Restrict Employees’ Access to the NLRB

Broad arbitration agreements that cover “all claims or controversies” and do not explicitly carve out the right of employees to file charges with the National Labor Relations Board (“NLRB”) may be unlawful, under a recent NLRB decision.FN1 In Prime Healthcare, the NLRB scrutinized a broad employee arbitration agreement that:

·                 mandated arbitration for all claims or controversies for which a federal or state court would be authorized to grant relief;

·                 covered claims for violation of any federal, state, or other . . . statute, regulation, or public policy;

·                 stated the “purpose and effect” of the agreement was “to substitute arbitration as the forum for resolution of the Claims;” and

·                 excluded workers’ compensation an unemployment benefits claims but not charges filed with the NLRB or other administrative agencies.

Weighing (i) the nature and extent of the potential impact of the agreement on employees’ National Labor Relations Act (“NLRA”) rights, against (ii) legitimate employer justifications for the restriction,FN2  the NLRB invalidated the agreement.

Practical Takeaway 

            Although recent decisions have confirmed the validity of employment arbitration agreements, including agreements that preclude class-actions,FN3 arbitration agreements must be carefully worded and limited to ensure they are upheld, if challenged. Employers should consider whether their agreements have specific disclaimer language ensuring employees’ rights to file NLRB and other agency charges and engage in agency processes, or otherwise could be read to encompass all employment claims, without limitation, and be deemed unenforceable.

 

Footnotes:

FN1:   Prime Healthcare Paradise Valley, LLC and Richard Cardona and Stephene Ortega 368 NLRB No. 10 (June 18, 2019). The NLRA makes it an unfair labor practice “to interfere with, restrain, or coerce employees in the exercise of” their Section 7 rights. NLRA § 8(a)(1), 29 U.S.C. § 158(a)(1).

FN2:   The NLRB described this balancing test in The Boeing Company and Society of Professional Engineering Employees in Aerospace, IFPTE Local 2001, 365 NLRB No. 154 (Dec. 14, 2017). For a discussion of the Boeing Company standard, see our December 22, 2017 blog.

FN3:   See Epic Systems Corp. v. Lewis, 584 U.S.   , 138 S. Ct. 1612, 1632 (2018) (holding employer-employee agreements that contain class- and collective action waivers and require individualized arbitration do not violate Section 8(a)(1) of the NLRA).