Employers May Demand Arbitration Agreements in Response to Collective Actions, NLRB Rules

Author: Michael Cardman, XpertHR Legal Editor

August 20, 2019

A new decision from the National Labor Relations Board (NLRB) brings welcome news to employers regarding mandatory arbitration agreements.

In CordĂșa Restaurants, Inc., the NLRB held that the National Labor Relations Act (NLRA) does not prohibit employers from promulgating mandatory arbitration agreements in response to employees opting in to a collective action under the Fair Labor Standards Act or state wage and hour laws. Furthermore, the Board held that the NLRA does not bar employers from informing employees that failing or refusing to sign a mandatory arbitration agreement will result in their discharge.

The CordĂșa opinion is the first NLRB ruling on mandatory arbitration agreements following the US Supreme Court's decision last year in Epic Systems Corp. v. Lewis, in which the Court held that class- and collective-action waivers in mandatory arbitration agreements do not violate the NLRA. The Board reasoned under Epic that filing a collective action is a procedural step and an employer forbidding it does not chill or prevent employees from exercising their Section 7 rights to engage in concerted activities for mutual aid and protection.

The NLRB also reaffirmed its long-standing precedent that employers are prohibited from taking adverse action against employees for engaging in concerted activity by filing a class or collective action.