NLRB General Counsel: NLRA No Per Se Bar to Mandatory Class Action Waivers in Arbitration Agreements

Posted: July 1, 2010

Labor, including Preventive Practices

Departing National Labor Relations Board General Counsel Ronald Meisburg, addressing whether class/collective action waivers in mandatory arbitration agreements unlawfully restrict employees’ protected concerted activity under the National Labor Relations Act, has told the agency’s Regional Offices:

While such class action waivers are enforceable, the filing of a class action lawsuit or arbitral claim seeking to enforce an employment-related statute and challenging such a waiver is protected by Section 7 of the NLRA, which provides employees the right to engage in concerted activities for the purpose of mutual aid and protection.
Arbitration agreements should make clear that employees have the right to challenge the enforceability of these agreements without discipline, separation or other retaliation, since this right is protected under Section 7 of the NLRA.
If an employer threatens, disciplines or discharges an employee for filing a class action lawsuit or for challenging the arbitrability of class-related claims, the employer violates the NLRA; however, the employer may lawfully seek to enforce the waiver in a legal forum.

The Board’s chief prosecutor’s views were expressed in a Guideline Memorandum dated June 16, 2010, and issued on June 24, 2010, only days before his tenure at the NLRB ended. While these Memoranda are not legally binding on the five-member Board, which ultimately passes upon alleged unfair labor practices, they do instruct the agency’s Regional Directors on whether to issue an administrative complaint on unfair labor practice (ULP) charges raising these issues

Reiterates and Clarifies

Meisberg’s Memorandum in large part reiterated certain principles established by NLRB precedent. The Board has said previously that employees’ collective and class action lawsuits over employment matters are protected concerted activity. NLRA claims also are not subject to arbitration, Meisberg noted.

While class action waivers may be enforceable, the General Counsel clarified, mandatory arbitration agreements that could reasonably be read by an employee as prohibiting the employee from joining with other employees to file a class action lawsuit is impermissible under the NLRA. He urged Regional Offices to “examine the wording of all employer documents distributed to and/or signed by employees relating to the employer’s mandatory arbitration agreements.”

What Employers Can Do

In light of this directive, employers with arbitration agreements that contain class or collective action waivers should consider the following:

Including a provision in any mandatory arbitration agreement stating to employees that they have the right to challenge the enforceability of the agreement in federal or state courts without fear of reprisal, and that they will not be retaliated against if they choose to do so, even though the employer will seek to enforce the waiver;
Including a provision stating that the arbitration agreement does not preclude filing unfair labor practice charges regarding the waiver with the NLRB; and
Where an applicant refuses to sign an arbitration agreement as a condition of employment, prior to revoking any job offer, advising the applicant that the agreement does not prohibit a challenge to the validity of the class action waiver.

These measures could assist in the defense of an unfair labor practice charge that such an agreement restrains an employee’s exercise of Section 7 rights. However, this is an unsettled area of law and the NLRB could find that any adverse personnel action against an individual for refusing to sign an arbitration agreement with a class action waiver is unlawful.

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This Guideline Memorandum also emphasizes the importance of ensuring that all company agreements and policies comply with the NLRA. This concern is heightened by the installation of a new, employee-friendly NLRB.

If you need assistance in reviewing and revising your policies and agreements in light of anticipated changes from the NLRB, please do not hesitate to contact your Jackson Lewis attorney.