Non-Union Employer’s Mandatory Arbitration Provision Violates The NLRA

by Franczek Radelet P.C.

The National Labor Relations Board (NLRB) continues with its trend of finding fault with employer policies, this time holding that a non-union company’s mandatory grievance and arbitration policy violated the National Labor Relations Act (NLRA).

Supply Technologies, LLC, a non-unionized employer, established a mandatory and binding grievance and arbitration program as a means of addressing most employment-related issues rather than having its employees file suit in federal or state court.The company required that all employees sign the arbitration agreement and it terminated 20 employees who refused to do so.

The agreement contained broad language stating that “any claim of any kind” by the employee against the employer would be resolved through private arbitration.  It then proceeded to list a wide variety of specific employment law claims that were covered, including claims under Title VII, the Americans with Disabilities Act, the Family and Medical Leave Act, and the Fair Labor Standards Act. The agreement did note, however, that this list was not all-inclusive. It further identified three types of claims that were specifically not covered by mandatory arbitration, namely criminal matters, workers’ compensation claims, and unemployment compensation claims. Notably, the agreement did not mention that claims under the NLRA were either specifically included or excluded under the agreement. Indeed, the agreement never mentioned the NLRA at all. It did state, however, that employees could still file a charge or complaint with a “government agency”, and were free to cooperate with subsequent agency investigations. 

Though noting that there was no evidence that the new arbitration policy was created in response to any protected concerted activity or as a means to restrict such activity, the NLRB nevertheless held that the agreement violated the NLRA because employees would reasonably construe its language to prohibit them from filing unfair labor practice charges or from accessing other Board processes. The Board based its decision principally on two factors: the broad all-inclusive language in the agreement, and the specific, narrow, and limited list of exclusions. The NLRB concluded that an employee would reasonably interpret the agreement to cover claims arising under every law, even the ones not identified, except for the three specific types of claims that were expressly excluded. The Board also noted that the two other documents (entitled “Official Rules” and “Questions and Answers”) that the company concurrently gave to employees to help explain the new grievance and arbitration program not only failed to clarify the ambiguities created by the arbitration policy, but exacerbated them.

Member Hayes dissented. He pointed out that the agreement notified employees of their right to file a charge with all government agencies - which necessarily included the NLRB – and further that one of the accompanying documents explaining the program stated the grievance and arbitration program “is limited to disputes, claims or controversies that a court of law would be authorized to entertain”. The majority, however, was not persuaded by this argument. As noted above, they found the agreement to be ambiguous (because of the broad, all-inclusive language), and construed the ambiguity against the employer since it was the party that drafted the agreement. 

This case serves as another reminder for all employers, including those with non-union workforces, that they must conduct a careful review of their personnel policies to ensure those policies comply with current NLRB decisions and policy. Any employment-related policies which arguably restrict employees’ Section 7 rights are prime targets to be declared unlawful. And, although no guaranty the Board would still not find the policy unlawful, at a minimum these policies should contain express language that informs employees that nothing in the policies restrict their rights under the National labor Relations Act.  Employers who fail to do so act at their own peril. 

Although the validity of this decision is now in question, given that several Board members’ recess appointments were recently held to be invalid by the D.C. Circuit Court of Appeals, this case remains the law pending a potential en banc review of the D.C. Circuit’s decision or an appeal to the U.S. Supreme Court.  Meanwhile, the NLRB issued a statement that the D.C. Circuit’s decision only applies to that particular case and does not invalidate all of the Board’s recent decisions.  Consequently, for the time being employers should continue to follow the guidelines above.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Franczek Radelet P.C. | Attorney Advertising

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