National Labor Relations Board Issues Guidelines for Employers’ Arbitration Policies

On June 16, 2010, the National Labor Relations Board (NLRB) issued a Guideline Memorandum addressing the legal framework to use in employer’s mandatory arbitration policies.

The Guideline Memorandum includes the following principles:

(1) The concerted filing of a class action lawsuit or arbitral claim seeking to enforce employment statutes is protected by Section 7 of the Act, and if an employer threatens, disciplines or discharges an employee for such concerted activity, the employer violates Section 8(a)(l) of the NLRA.

(2) Any mandatory arbitration agreement established by an employer may not be drafted using language so broad that a reasonable employee could read the agreement and/or related employer documents as conditioning employment on a waiver of Section 7 rights, such as joining with other employees to file a class action lawsuit to improve working conditions.

(3) Nonetheless, an employer’s conditioning employment on an employee’s agreeing that the employee’s individual non-NLRA statutory employment claims will be resolved in an arbitral forum is permissible under the Supreme Court’s holding in Gilmer, supra. The validity of such individual employee forum waivers is normally determined under non-NLRA law, such as the Federal Arbitration Act and the employment statutes at issue.

(4) So long as the wording of these individual forum waiver agreements makes clear to employees that their Section 7 rights are not waived and that they will not be retaliated against for concertedly challenging the validity of those agreements through class or collective actions seeking to enforce their employment rights, an employer does not violate Section 7 by seeking the enforcement of an individual employee’s lawful Gilmer agreement to have all his or her individual employment disputes resolved in arbitration. Similarly, an employer may lawfully seek to have a class action complaint dismissed on the ground that each purported class member is bound by his or her signing of a lawful Gilmer agreement/waiver.

In sum, if mandatory arbitration agreements are drafted to make clear that the employees’ Section 7 rights to challenge those agreements through concerted activity are preserved and that only individual rights are waived, no issue cognizable under the NLRA is presented by an employer’s making and enforcing an individual employee’s agreement that his or her non-NLRA employment claims will be resolved through the employer’s mandatory arbitration system. In such cases, an employer is acting in accord with its rights under Gilmer and its progeny.

Find the full text of the memorandum here.

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