NLRB Yet Again Rules Class Arbitration Waivers in Employment Contracts are Invalid

The National Labor Relations Board (“NLRB”) has yet again ruled that a class arbitration waiver included in an employment contract violates the National Labor Relations Act (“NLRA”). In Amex Card Service Co., No. 28–CA–123865 (Nov. 10, 2015), Amex required its workers to agree to submit any claims against the company to binding arbitration as a condition of employment. The arbitral clause also prohibited collective arbitration and stated each worker must engage in arbitration proceedings in his or her individual capacity.

In March 2014, three Amex employees submitted a charge to the NLRB alleging the company violated the NLRA by forcing workers to engage in arbitration of wage and hour claims in Arizona. A three-member NLRB panel found that Amex engaged in unfair labor practices by enforcing the mandatory arbitration clause.

According to the NLRB:

Here, we find that the Respondent violated Section 8(a)(1) by maintaining and enforcing the Policy and the Form (collectively, the Respondent’s arbitration policy). First, we find that the Respondent’s arbitration policy is facially unlawful under D. R. Horton and Murphy Oil, supra. Like the policies in those cases, the Respondent’s arbitration policy requires employees, as a condition of their employment, to submit their employment-related legal claims to individual arbitration, thereby compelling employees to waive their Section 7 right to pursue such claims through class or collective action in all forums, arbitral and judicial. See Murphy Oil, 361 NLRB No. 72, slip op. at 1; D. R. Horton, 357 NLRB No. 184, slip op. at 1.

Second, we find that the Respondent’s arbitration policy is also unlawful because employees would reasonably believe that it waived or limited their right to file a charge with the Board or to access the Board’s processes. Although the Policy states that “[a]ny claim under the National Labor Relations Act” is not covered, and that the Policy “does not preclude an individual from filing a claim or a charge with a governmental administrative agency . . . such as the National Labor Relations Board,” the Form contains no such exceptions. When the Policy and the Form are read together, it is at best ambiguous whether employees retain the right to file a charge with the Board or to access the Board’s processes. “[A]ny ambiguity in the rule must be construed against the Respondent as the promulgator of the rule.” Lafayette Park Hotel, 326 NLRB 824, 828 (1998), enfd. 203 F.3d 52 D.C. Cir. 1999). Moreover, the Form is drafted as a complete agreement to be signed by the employee; in it, the employee acknowledges receipt of the Policy, but it does not incorporate the Policy in its operative language, which expressly covers “all employment-related disputes,” without limitation. Therefore, the Respondent’s arbitration policy also violates Section 8(a)(1) because employees would reasonably believe that it interferes with their ability to file a Board charge or to access the Board’s processes. See U-Haul Co. of California, 347 NLRB at 377–378.

Third, because we find that the Respondent’s arbitration policy is unlawful, we also find that the Respondent violated Section 8(a)(1) by enforcing the arbitration policy through its motion to compel individual arbitration in the cause of action brought by the Charging Parties and two other former employees in the United States District Court for the District of Arizona. See Murphy Oil, 361 NLRB No. 72, slip op. at 19.

Although the NLRB’s decision in the Amex case is not subject to review by the Fifth Circuit, the appellate court adhered to its 2013 decision in D.R. Horton, Inc. and overturned the Board’s ruling in Murphy Oil on October 26th. (You can read more about that case in a prior Disputing blog post.) Given the Board’s clear lack of regard for the Fifth Circuit’s holdings, it would appear that the NLRB is hoping to create a circuit split on the issue of class arbitration waivers in employment disputes.

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