NLRB and Mandatory Arbitration Agreements
The National Labor Relations Act (NLRA) prohibits employers from interfering with employees’ rights to engage in concerted activity as a class. However, the Supreme Court in Epic Systems v. Lewis held that arbitration agreements that contain waivers of class action and collective action, and require employees to resolve disputes individually, do not violate the NLRA. On August 14, 2019, the National Labor Relations Board (NLRB) addressed this issue further in Cordua Restaurants, Inc. NLRB No. 43 (2019). The Cordua action marginally expanded the ruling in the Epic case.
The Cordua Restaurants, Inc. Case
In this case, a restaurant group already had a mandatory arbitration agreement with a waiver of an employee’s right to file or participate in class and collective actions in court or arbitration proceedings. When several workers filed a lawsuit alleging wage and hour violations, the restaurant group revised its’ agreement to include a ban on opting into collective bargaining actions. The group made signing of the revised agreement a condition for employment. The workers claimed that this violated their rights under the NLRA. The NLRB disagreed stating that opting in to a collective action was simply a procedural step required to participate in a collective action that was already waived by the prior agreement.
The Board in Cordua specifically held that:
- Employers may inform employees that failure or refusal to sign a mandatory arbitration agreement may result in their discharge without violating the NLRA.
- Employers may promulgate mandatory arbitration agreements in response to employees opting into collective bargaining or collective action for state wage and hour laws under the Fair Labor Standards Act (FLSA).
- Employers may not take retaliatory action against employees for engaging in concerted activity or for filing class and collective actions concerning wages, hours, and working conditions.
The Cordua decision permits employers to implement mandatory arbitration agreements and policies as a condition to employment. However, the Cordua decision does not authorize an employer to punish an employee who then joins a class action lawsuit based on wages, hours, or working conditions. Employers should instead seek a court or arbitrator to enforce the arbitration agreement.
Conclusion
Under this decision an employer may require an employee to sign a mandatory arbitration agreement with a class-action lawsuit waiver without fear of violating the NLRA. However, employers must be careful to avoid any action that may be perceived as retaliatory against an employee for engaging in a class action lawsuit. An employer must utilize the court system and arbitration proceeding to enforce the mandatory arbitration agreement instead.
The employment attorneys at MacMain Leinhauser represent public and private employers in collective bargaining negotiations and arbitration proceedings before the Pennsylvania Labor Relations Board and the NLRB. Located in West Chester, Pennsylvania, we serve clients throughout Philadelphia. For an initial consultation, contact us online or call us at 484-318-7106.