NLRB Continues Scrutiny of Employment Arbitration Agreements

Several years ago, employers often faced challenges to handbooks under the National Labor Relations Act ("NLRA"), a federal law regulating union-management relations. This threatened many basic policies such as privacy, confidentiality, professionalism, and at-will employment.


Employment arbitration agreements suffered the same scrutiny with additional arguments that (1) class action waivers prevented "concerted activity" under the NLRA, and (2) the agreements suggested that employees were prohibited from filing charges with, or seeking help from, the National Labor Relations Board ("NLRB").


The Supreme Court resolved the first issue a few years ago, holding that employers cannot be forced to arbitrate class claims without an employer's express consent. (Opinion can be viewed here.) And until recently, businesses faced less pressure when drafting arbitration agreement language given federal courts' deference to national arbitration law.


But change in is the air. The NLRB has a new 'acting' General Counsel - and the NLRB just issued an opinion essentially requiring language informing employees they may file charges directly with the agency.


In a decision issued last week, the Board held an arbitration agreement unlawful even though it contained an express exclusion providing that it did not "limit an employee’s ability to complete any external administrative remedy (such as with the EEOC)." The panel concluded that, even though NLRB proceedings are administrative remedies, an employee could "read [the arbitration] language to encompass filing a charge with the Board, rather than, as stated, with the EEOC" (quoting a similar prior NLRB opinion). The decision, Brinker National Payroll Co., can be downloaded here.


The opinion briefly mentions exclusions that were permitted in other cases. We nonetheless suggest that employers use caution, as current agency staff are likely to enforce the case broadly. We recommend language making clear that NLRA-governed activity is not subject to mandatory arbitration.


A sample agreement containing a clear NLRB exclusion - but with broad application and an express class-action waiver - can be viewed here.


(Our usual disclaimer: not to be used without attorney advice!)