BOARD GIVES EMPLOYERS BROAD RIGHTS TO INSIST UPON MANDATORY ARBITRATION AGREEMENTS PROHIBITING COLLECTIVE ACTIONS

Written on April 01, 2020.

This newsletter in the past has published many articles about the Epic Systems Supreme Court ruling, which holds that employers may enter into individual arbitration agreements with employees requiring almost all disputes to go to individualized arbitration and waiving class and collective actions. In a ruling on August 14, 2019, the NLRB broadened and clarified employer rights in this regard. Cordua Restaurants, Inc., 368 NLRB No. 43.

The NLRB addressed several important questions involving mandatory arbitration agreements following the Supreme Court's Epic Systems decision. Specifically, the Board held:

Employers are not prohibited under the NLRA from informing employees that failing or refusing to sign a mandatory arbitration agreement will result in their discharge.
Employers are not prohibited under the NLRA from promulgating mandatory arbitration agreements in response to employees opting in to a collective action under the Fair Labor Standards Act or state wage-and-hour laws.
Employers are prohibited from taking adverse action against employees for engaging in concerted activity by filing a class or collective action, consistent with the Board's long-standing precedent.

What this means for employers:

Employers are allowed to condition employment on signing mandatory arbitration contracts.
Employers can warn workers that they will be fired if they fail or refuse to sign mandatory arbitration agreements.
Employers can require employees to sign mandatory arbitration pacts in response to workers opting into FLSA collective actions or class actions brought under state wage-and-hour laws. In those agreements, employees must agree that they will not opt into an existing collective action. This is a powerful weapon for an employer to wield in response to the filing of a collective action.

According to a 2018 study by the Economic Policy Institute, more than half of nonunion, private sector employers have mandatory arbitration procedures. However, these agreements are not "one size fits all." It is advisable to contact qualified counsel to craft an agreement that meets the needs of your particular business and workforce.