Does Your Arbitration Agreement Include a Carve-Out for Employee Access to the National Labor Relations Board? It Should.
Most employers mandating arbitration agreements as a
condition of employment do not intend to prevent employees from filing unfair
labor charges with the National Labor Relations Board (“Board”). But unless
their agreements contain a “savings clause” making that clear to employees,
they are susceptible to challenge that, at least according to the Board, could invalidate
the entire agreement.
In Prime Healthcare
Paradise Valley, LLC, issued on June 18, 2019, the Board held that an
arbitration agreement that either explicitly prohibits, or could be reasonably
interpreted as prohibiting, the filing of claims with the Board (or, more
generally, with administrative agencies) is unlawful under the National Labor
Relations Act (NLRA). The arbitration agreement involved did not prohibit
employees from filing charges with the Board or other administrative agencies.
Instead, it contained the kind of provisions that are not atypical of most
arbitration agreements. It required “all claims or controversies for which a
federal or state court would be authorized to grant relief” be resolved by
arbitration; it stated that covered claims “include, but are not limited to”
claims under a long list of federal statutes; and it provided the “purpose and
effect of the agreement is to substitute arbitration as the forum for resolution
of claims.” According to the Board: “Reasonably interpreted, these provisions,
taken as a whole, make arbitration the exclusive
forum for the resolution of all claims, including federal statutory claims”
under the NLRA. The agreement thus interfered with employee rights and violated
the NLRA, requiring rescission.
Fortunately, employers can avoid coming under fire for this
violation without undermining their arbitration programs (unlike the Board’s
last challenge to arbitration agreements – that class waivers interfered with
employees’ exercise of protected rights and were prohibited by the NLRA – which
the Supreme Court rejected last year in Epic
Systems Corp. v. Lewis). The Board’s order gave the employer the option to
rescind the agreement or revise it “to make clear to employees that [the
arbitration agreement] does not bar or restrict employees’ rights to file
charges” with the Board.
The bottom line is an action item for all employers with an
arbitration program: Review your arbitration agreements or policies. Could they
be reasonably interpreted as prohibiting employees from filing charges with the
Board or other administrative agencies? If they contain provisions similar to
those in Prime Healthcare, they are
susceptible to this challenge. Consider revising them to include a carve-out or
savings clause making clear that they do not interfere with employees’ rights
to file charges with the NLRB (or other administrative agencies).
And be sure that any revised agreement is properly
implemented – Prime Healthcare had revised its agreement four years earlier to
include the exact kind of savings clause that the Board wanted to see, but
foot-faulted in not clearly modifying or revoking its old agreements.
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