NLRB Says Arbitration Agreement Without Carve-Out for Unfair Labor Charges Violates Federal Labor Law
- September 21, 2015
Last week’s EmployNews reported on efforts by the Equal Employment Opportunity Commission to attack employer-prepared releases because they supposedly do not contain adequate assurances that their terms do not prevent employees filing charges of discrimination with the agency. Last month, the National Labor Relations Board came to a similar conclusion, finding a mandatory arbitration agreement used with employees to violate the NLRA because it did not make clear that employees could file administrative claims with the agency.
PJ Cheese, Inc. involved a mandatory arbitration agreement required by the employer as a condition of hiring. The agreement stated that it “is the exclusive means by which [employment disputes] may be resolved.” The agreement contained carve-outs for several actions not subject to arbitration, such as Workers’ Compensation claims. At the end of the document, the agreement stated that it “will not prevent you from filing a charge with any state or federal administrative agency.”
Despite this disclaimer, the NLRB found that the agreement constituted an unfair labor practice because it could mislead employees into believing that they could not file claims with the NLRB. The Board justified this logic by noting that the exception at the end was not included in the specific carve-outs earlier in the document. This internal conflict could create ambiguity that would confuse the average employee.
The NLRB has systematically attacked use of mandatory arbitration agreements for a number of years. Despite U.S. Supreme Court decisions affirming the use of arbitration agreements, the Board has taken the position that the employment relationship enjoys special legal protections that make such agreements incompatible with the NLRA’s terms. The Board also concluded that arbitration agreements that preclude class or collective action arbitrations constitute a different NLRA violation.
To date, federal courts have proven reluctant to adopt this reasoning, especially in the face of strong Supreme Court precedent favoring arbitration as a quicker and less expensive way of resolving legal disputes. Until higher courts weigh in on the NLRB’s positions, employers using mandatory arbitration agreements should consider amending those agreements to add clear and unambiguous language confirming that their terms do not prevent an employee from complaining to any government agency.