NLRB Issues Surprise Mandatory Arbitration Decision

The National Labor Relations Board has issued a unanimous decision invalidating an employer’s mandatory arbitration agreement.

This decision, from what is a Republican controlled board, comes as a surprise to many observers.

As reported in HR Today:

The June 18 Prime Healthcare decision analyzed the employer’s arbitration agreement using the relatively new Boeing Co. standard for evaluating facially neutral policies and rules that potentially interfere with employees’ protected rights, but fell on the side of the workers. The decision may require employers to adjust their arbitration agreements to ensure [they] stay on the right side of the law.

For those unfamiliar with arbitration agreements, they’re a common employment contract clause that prevents employee vs. employer conflicts from going to court—requiring any conflict be solved through arbitration.

In making their decision, the NLRB made it clear that nothing in the recent U.S. Supreme Court decision which approved class and collective action waivers in mandatory arbitration agreements supersedes the rights of workers established in the National Labor Relations Act.

Employee Rights

That act gave workers the right to file complaints with the NLRB.

According to the June 18 decision, any effort to overtly restrict an employee’s right to file such a complaint must be found unlawful.

In the Prime Healthcare decision, NLRB found that Prime’s mandatory arbitration clause potentially interfered with their employees’ rights because it effectively covered all claims and failed to exclude NLRA claims.

Employers should immediately review any arbitration agreements to see whether they contain language that could be construed as too broad.

Given this decision, employers should immediately review any arbitration agreements in use to see whether those agreements contain language that could be construed as too broad—precluding employees from filing complaints with the NLRB.

The general disclaimer language in those agreements should also be reviewed.

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About the author: Patrick McHale is a partner at the labor and employment law firm Kainen, Escalera & McHale in Hartford.