Another Day Another NLRB Decision Invalidating Arbitration Agreements

An NLRB Administrative Law Judge issued a decision against a Domino’s franchisee for violating the National Labor Relations Act. The franchisee required employees, as a condition of employment, to agree to pursue legal disputes with the restaurant owners in binding arbitration on an individual basis. Thus, the employees waived their rights to pursue class and collective legal action. We all know how this works out for the employer….

The primary question in this case was whether the company’s arbitration agreement violated the NLRA. The agreement clearly and expressly barred employees from exercising their right to pursue collective employment claims in all forums. Administrative Judge Tafe concluded that, although circuit courts generally disagree, she must apply the Board’s rationale in D.R. Horton and Murphy Oil USA to the instant case. She summarized her decision as follows:

Having found that Respondent engaged in unfair labor practices, I shall order it to cease and desist from such conduct and to take certain affirmative actions designed to effectuate the policies of the Act.

She continued that the employer must either rescind or revise the policy or make clear to employees that the arbitration agreement does not preclude them from pursuing collective actions or filing charges with the NLRB. Oh yeah, the employer must also reimburse the plaintiff for attorneys’ fees related to his opposition of the franchisee company’s request that his lawsuit be sent to arbitration.

Matt Austin owns Austin Legal, LLC, a boutique law firm based in Ohio that limits its representation to employers dealing with labor, employment, and OSHA matters. You can call Matt at (614) 285-5342 or email him at Matt@MattAustinLaborLaw.com.

NLRB ALJ Blindly Followed Murphy Oil Because He Had To, Not Because He Wanted To

In a 2014 case named Muphy’s Oil, the NLRB held that arbitration agreements barring workers from pursuing class actions are unlawful. Several Circuit Courts have overturned the NLRB’s decision, while two Circuit Courts have upheld it. One of those two courts is the Ninth Circuit. So, when a case came before an Administrative Law Judge where a Ninth Circuit employer required employees to waive their right to class or collective action, the Judge’s job was rather simple. Per the judge, “I am bound to follow board precedent irrespective of contrary opinions by circuit courts, unless and until the Supreme Court makes a definitive ruling on the subject matter in dispute.”

He then provided readers some commentary. For example, he thought it was doubtful many employees would have even understood the meaning of the arbitration provision, which was located at the bottom of a 3-page document and does not even explain the type of charges an employee may bring before the NLRB. The judge continued, “Strictly speaking, the policy does not require employees to execute the proffered ‘Agreement to be bound by Alternative Dispute Resolution Policy.’” “But one has to wonder how many employees, being asked to sign the document, typically at the start of their employment, would have sufficient knowledge to even consider refusing to sign it.”

The issue of whether an employer can lawfully maintain a arbitration agreement barring class or collective action is critically important to companies and workers alike. Since some Circuits have ruled that employers should be allowed to enforce these agreements and some Circuits have ruled them unlawful, this issue will likely be decided by the United States Supreme Court once it has a full complement of 9 justices.

Matt Austin owns Austin Legal, LLC, a boutique law firm based in Ohio that limits its representation to employers dealing with labor, employment, and OSHA matters. You can call Matt at (614) 285-5342 or email him at Matt@MattAustinLaborLaw.com.

NLRB Carve Out to Arbitration Clause Not Adequate, says Board

By now, most companies know that the National Labor Relations Board frowns upon mandatory arbitration agreements, even voluntarily entered into ones, and now even ones that permit employees to file charges with the Board. Specifically, an Administrative Law Judge found that the company acted unlawfully in making it “reasonably clear” that individual employees could file NLRB charges because the company’s “exclusions and restrictions” language confused, rather than clarified, the rights of employees to file unfair labor practice charges with the Board.

The policy language provided, “Any non-waivable statutory claims, which may include wage claims within the jurisdiction of a local or state labor commission or administrative agency, charges before the EEOC, NLRB, or similar local or state agencies, are not subject to exclusive review by arbitration.” According to the Board, the company’s suggestion that it “may” exempt the filing of Board charges is misleading in that it implies that some claims that are cognizable under Board law may nevertheless be subject to arbitration under the Employer’s policy.

Now I’m confused in trying to figure out how a plain language reading of the policy that permits the filing of Board charges was confusing to the Board.

Matt Austin is a lawyer based in the Columbus, Ohio office of Roetzel & Andress, LPA who limits his practice to representing employers dealing with labor, employment, and OSHA matters. You can call Matt at (614) 723-2010 or email him at maustin@ralaw.com.

Applebee’s Class Action Ban Latest to be Ruled Unlawful by National Labor Relations Board

Since arbitration helps companies avoid the high costs associated with litigation, companies often have employees enter into agreements to arbitrate disputes rather than take them to court.

Workers at Applebee’s restaurants in Pennsylvania, New Jersey, Maryland, and Delaware typically sign an arbitration agreement that includes a term prohibiting employees from becoming members of a class action. The National Labor Relations Board recently ruled that this arbitration agreement violates federal labor law.

The Board recently reversed its position on class action waivers in arbitration agreements. Such waivers used to be permissible. Now, though, arbitration agreements that preclude workers from joining a class action are unlawful. Unsurprisingly, Applebee’s counsel argued that the NLRB should follow federal court cases that permit these waivers. However, the Administrative Law Judge who heard the case disagreed stating that NLRB judges must follow NLRB law unless it has been reversed by the United States Supreme Court.

The state of law related to arbitration agreements is evolving, and it is possible that the Supreme Court will make a final determination of the legality of arbitration agreements. Until then, employers need to be cautious about arbitration agreements that preclude class actions.

Matt Austin is a lawyer based in the Columbus, Ohio office of Roetzel & Andress, LPA who limits his practice to representing employers dealing with labor, employment, and OSHA matters. You can call Matt at (614) 723-2010 or email him at maustin@ralaw.com.

Arbitrator Re-Writes Union Contract to Make Certain Employees Eligible for a Bonus

Seven different unions were negotiating a collective bargaining agreement with a single employer. While bargaining for the 2011 agreement, everyone agreed to exclude newly hired workers from an established pension plan, but did not discuss the “Copper Price Bonus” or workers’ eligibility for it. The bonus was kept in place in the 2011 version of the agreement. After the agreement was ratified, an HR manager “became aware that there could be an issue with eligibility for the Copper Price Bonus for new hires…because of the link between receiving the Copper Price Bonus and eligibility for the pension plan.” The HR manager “was concerned that this might be a problem for new hires since they were no longer eligible for the pension plan.” Ultimately, the company announced that workers hired after July 1, 2011, would not be eligible for the quarterly bonus; the unions grieved this decision.

According to the arbitrator, the unions and the employer made a mutual mistake during negotiations by “failing to change the bonus eligibility language to ensure that new hires remained eligible for the bonus” and that neither party made an effort during bargaining to change the eligibility requirements for the bonus despite doing so for the pension. Further, “there was no evidence that by removing new hires from participation in the pension plan that the new hires would then also not be eligible for participation in the Copper Price Bonus.” This ruling was made despite the Company’s objection and argument that no mistake existed and even if one did exist, the arbitrator lacked authority “to rewrite the contract to make new hires eligible for the bonus.”

Matt Austin is a lawyer based in the Columbus, Ohio office of Roetzel & Andress, LPA who limits his practice to representing employers dealing with labor, employment, and OSHA matters. You can call Matt at (614) 723-2010 or email him at maustin@ralaw.com.

Oil Company Latest to Lose Arbitration Agreement Enforcement from NLRB

Relying on the controversial D.R. Horton case, the NLRB ruled that gas station chain Murphy Oil’s arbitration agreements barring employees from pursuing class actions were unlawful. Three pro-Union Board Members ruled that the gas station violated the law by requiring employees to resolve employment claims in individual arbitration and seeking to enforce its agreements in court after a former employee filed a wage and hour lawsuit in court. As a reminder, D.R. Horton holds that arbitration agreements that are signed as a condition of employment and preclude workers from bringing joint, class, or collective claims over working conditions, are unlawful.

A scathing dissent from a pro-Company Board Member states, “with this decision, the majority effectively ignores nearly 40 Federal and State courts that, directly or indirectly, all recognize the flaws of the Board’s use of a strained, tautological reading of the National Labor Relations Act in order to both override the Federal Arbitration Act and ignore the commands of other federal statutes. This decision continues the cat and mouse game of the NLRB consistently invalidating arbitration agreements and forcing companies to appeal to the federal court system to enforce the agreements. I fully expect Murphy Oil to succeed on appeal and the plaintiff to be forced to withdraw her complaint in court and subject herself to the confines of the arbitration agreement.

Matt Austin is a lawyer based in the Columbus, Ohio office of Roetzel & Andress, LPA who limits his practice to representing employers dealing with labor, employment, and OSHA matters. You can call Matt at (614) 723-2010 or email him at maustin@ralaw.com.

NLRB Arbitration Agreement Antics Continue

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.