NLRB Trend Citing Murphy Oil in Class Waiver Cases Continues

Late last month, a National Labor Relations Board (“NLRB”) administrative law judge issued an order in Private National Mortgage Acceptance Co., LLC and Richard Smigelski, No. 20-ca-170020 (November 29, 2016).  In the case, the NLRB judge found that a mortgage lender, PennyMac, maintained an unlawful mandatory binding arbitration policy for its employees in violation of the National Labor Relations Act (“NLRA”).  According to the administrative law judge, PennyMac’s collective action waiver that was also a condition of employment was illegal under the law.

The judge stated:

This is another in a long line of cases involving whether (a) an employer can require its employees to agree, as a condition of continued employment, to utilize arbitration as an alternative to the judicial process for resolving employment disputes; and (b) whether an employer can require employees, as a condition of continued employment, to waive their ability to file class action claims. (Whether in a court or before an arbitrator).

It is the Board’s current position, despite reversals by several Circuit Courts, that an employer will violate Section 8(a)(1) of the Act when it requires its employees to utilize arbitration to resolve employment disputes and when it precludes employees from acting in concert to bring class actions, whether in court or before an arbitrator.

In my capacity as an Administrative Law Judge of the NLRB, 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.

Therefore, this case is controlled by the Board’s decision in Murphy Oil USA, Inc., 361 NLRB No. 72 (2014), enf. denied 808 F.3d 1013 (5th Cir. 2015).  In Murphy Oil and subsequent cases, the Board has consistently held that requiring employees to sign class action waivers, with or without an “opt out” clause, is a violation of Section 8(a)(1) of the Act.

Further, in light of the manner in which the MAP provisions are broadly drafted, I conclude that employees would have a reasonable basis for concluding that they would be precluded from filing charges with the National Labor Relations Board. In the absence of some reasonable explanation to employees of their rights under the National Labor Relations Act, the minimal statement to the effect that the MAP excludes charges filed with the Board is, in my opinion, insufficient to assure employees that their rights to file charges with the National Labor Relations Board have not been adversely affected. Solar City Corp., 363 NLRB No. 83, slip op. at page 6 (2015).

Finally, in light of current Board precedent, I must reject the Respondent’s contention that its Motions to compel individual arbitration were protected by the First Amendment’s Petition Clause. The Supreme Court in Bill Johnson’s Restaurants v. NLRB, 461 U.S. 731,731–743 (1983), noted that there were two situations where such legal actions do not enjoy the Amendment’s protection. The first is where the action is outside the State Court’s jurisdiction because of Federal preemption.  And the second is where the action seeks to enforce a matter which is illegal under Federal law. The Board has therefore restrained litigation efforts that have an illegal objective of curtailing employees’ Section 7 rights. Murphy Oil, supra, slip op.at 20–1, Convergys Corp., 363 NLRB No. 51, slip op. at fn. 5 (2015).

The NLRB administrative law judge then ordered the mortgage lender to stop maintaining or enforcing the mandatory arbitration policy and the proceeding was transferred to the Board.

This decision is especially timely as the United States Supreme Court is currently considering numerous petitions for certiorari related to the question of whether a class waiver included in an employer’s alternative dispute resolution provision is permissible under the NLRA.  Please stay tuned to this blog for future developments on this interesting issue!

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