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Employers Given Greater Freedom to Require Arbitration of Employment Disputes

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A restaurant acted lawfully when it required its employees to sign mandatory arbitration agreements directly in response to their opting into a wage and hour collective action lawsuit, the National Labor Relations Board (“NLRB”) has held.FN1 The NLRB’s decision resolves several important issues in the wake of the recent Epic Systems case, in which the Supreme Court held class action waivers in employment arbitration agreements are lawful.FN2  

In Cordúa Restaurants, several employees opted into a collective action lawsuit, causing the employer to (1) promulgate an updated arbitration agreement specifically stating employees could not opt into collective actions and (2) inform employees they could be discharged for refusing to sign the agreement. In finding these actions lawful, the NLRB reasoned that “an agreement requiring that employment-related claims be resolved through individual arbitration, rather than through class or collective action, does not restrict Section 7 rights in any way,” and it followed that imposing such an agreement was lawful even if done because employees engaged in Section 7 activities.FN3  

Practical Takeaway 

Employers have wide latitude to include arbitration requirements with class action waivers in their agreements with employees; however, implementing mandatory arbitration agreements is not the right decision for every employer. Employers are encouraged to contact an attorney with Campbell Litigation to discuss the pros and cons of arbitration agreements and to ensure the terms of existing arbitration agreements are enforceable.

 

Footnotes:

FN1:     Cordúa Restaurants, Inc. and Steven Ramirez Rogelio Morales and Shearone Lewis, 368 NLRB No. 43 (2019), available at https://www.nlrb.gov/case/16-CA-160901

FN2:     Epic Systems v. Lewis, 138 S. Ct. 1612 (2018), available at https://www.supremecourt.gov/opinions/17pdf/16-285_q8l1.pdf; see also https://www.rockymountainemployersblog.com/blog/2018/5/24/us-supreme-court-upholds-use-of-class-action-waivers-in-employment-arbitration-agreements

FN3:     Section 7 of the NLRA protects employees’ rights to “self-organization, to form, join, or assist labor organizations, to bargain collectively through representatives of their own choosing, and to engage in other concerted activities for the purpose of collective bargaining or other mutual aid or protection.” 29 U.S.C. § 157. In Cordúa Restaurants, the NLRB distinguished the case from a decision to impose an otherwise lawful rule that does restrict Section 7 rights (such as prohibiting solicitation on nonworking time), in response to employees’ protected, concerted activities, which remains unlawful. Notably, the Cordúa Restaurants decision was a mixed result, as the NLRB also found that the employer unlawfully fired an employee for discussing wage issues with coworkers and filing a collective action, which was a clear violation of the employee’s right to engage in concerted, protected activities.