The National Labor Relations Board (NLRB) has held that a union-free employer committed an unfair labor practice in violation of the National Labor Relations Act (NLRA) by maintaining a mandatory arbitration policy as a condition of employment because that policy could inhibit employees from filing charges with the Board.
The National Labor Relations Board (NLRB) has held that a union-free employer committed an unfair labor practice in violation of the National Labor Relations Act (NLRA) by maintaining a mandatory arbitration policy as a condition of employment because that policy could inhibit employees from filing charges with the Board. See U-Haul Co. of California, Case 32-CA-20665-1, 347 NLRB 34 (June 8, 2006).
In this case, the employer's arbitration policy stated that it "covers all disputes relating to or arising out of an employee's employment with UCC or the termination of that employment" and provided examples of the types of claims the agreement covered, concluding that it covers "any other legal or equitable claims and causes of action recognized by local, state or federal law or regulations." The Board held that the language "any other legal or equitable claims and causes of action recognized by local, state, or federal law or regulations" could reasonably be interpreted to include the filing of unfair labor practice charges.
The Board reasoned that any challenge to an employer rule for anti-union bias must begin with an analysis of whether the rule restricts protected employee activity. If so, the Board will find it unlawful. "If, however, the rule does not explicitly restrict activity protected by Section 7, then finding of a violation is dependent on a showing of one of the following: (1) reasonable employees would construe the language to prohibit Section 7 activity; (2) the rule was promulgated in response to union activity; or (3) the rule has been applied to restrict the exercise of Section 7 rights."
While the Board noted the language in this agreement did not expressly prohibit employees from resorting to Board procedures, the breadth of the policy to causes of action “recognized by federal law or regulations” would reasonably make employees feel that filing of unfair labor practice charges was prohibited. The Board discounted general language in the agreement that could exclude unfair labor practice filings and noted that the policy provides no exclusion for administrative proceedings before the NLRB. The Board concluded:
Accordingly, because the employees would reasonably construe the broad language to prohibit the filing of unfair labor practice charges with the Board, we find the policy violates Section 8(a)(1) of the Act.
The Board concluded by ordering the company, among other things, to: stop requiring employees to execute waivers of their right to take legal action with respect to their hire, tenure, and terms and conditions of employment, to the extent such waivers apply to the filing of Board charges; remove waivers from all employee files and notify the employees that the waivers have been removed and will not be enforced in any way; and post a notice stating that the company has rescinded its arbitration provision requiring employees to waive legal actions relating to their employment "to the extent it applies to filing charges with the National Labor Relations Board."
Employers' Bottom Line:
The Board's decision in this case clearly states that arbitration agreements that have broad coverage language and do not expressly preserve an employee's right to file charges with the Board are unlawful under the NLRA. Employers should review their arbitration policies to determine (1) if they are broadly drafted; and (2) if the express reservation of NLRB filing rights is included. Otherwise such policies could be subject to similar legal challenges in the future.
If you have any questions regarding this decision or the language of your existing or proposed arbitration agreements, please consult the Ford & Harrison attorney with whom you usually work or the author of this Alert, John Allgood, jallgood@fordharrison.com, (404-888-3832), an attorney in our Atlanta office.