The National Labor Relations Board recently found the arbitration agreements of three companies unlawful. A clothing store, grocery chain, and limousine company each had their arbitration agreements axed by the Board for prohibiting employees from acting concertedly against their employer. Specifically, clothing store Ross Stores required employees to agree to the arbitration policy that required resolution by mediation or “final and binding arbitration and not by a court or jury” as a condition of employment.
As for the grocery chain, Bristol Farms, the Board said that it violated the National Labor Relations Act by “maintaining mutual agreement to arbitrate that employees reasonably would believe bars or restricts their right to file charges with the NLRB.” The limousine company had its employees sign a similar arbitration agreement, but also containing an explicit class action waiver.
The rulings of all three cases relied on the Board’s D.R. Horton decision outlawing mandatory arbitration agreements. D.R. Horton remains binding precedent for NLRB proceedings despite being overruled by the Fifth Circuit Court of Appeals. These cases continue to prove that mandatory arbitration agreements will be found unlawful at the ALJ level and on appeal by the NLRB. However, on further appeal, courts will likely continue to find them lawful. The only remaining question is whether employers have the desire and ability to reach the circuit court level.