National Labor Relations Board Finds Mandatory Arbitration Unlawful
In U.S. Express Enterprises, Inc. and U.S. Express, Inc. and Justin L. Swindler the National Labor Relations Board (NLRB) considered whether a mandatory arbitration agreement (MAA) that was a condition of employment violated section 8(a)(1) of the National Labor Relations Act (NLRA). Here, the employer required employees to sign an agreement that prohibited the employees from pursuing any legal dispute in Court and instead required that such disputes be pursued in arbitration. The mandatory arbitration agreement contained an “opt-out” provision, but the “opt-out” was required to be exercised within 30 days of employment. The NLRB recognized prior NLRB decisions that an employer violates Section 8(a)(1) of the Act by “requiring employees to waive their right to collectively pursue employment-related claims in all forums, arbitral and judicial,” because “[t]he right to engage in collective action— including collective legal action—is the core substantive right protected by the NLRA and is the foundation on which the Act and Federal labor policy rest.” The Board further concluded that finding such a mandatory arbitration agreement unlawful was “consistent with the well-established interpretation of the NLRA and with core principles of Federal labor policy” and did not “conflict with the letter or interfere with, the policies underlying the Federal Arbitration Act.” The fact that there was an-opt out provision in the arbitration agreement was not persuasive to the Board. They found “The opt-out provision needs to be analyzed in the context of the purpose of the Act: To balance the inequality of bargaining between employers and individual employees by fostering collective action by employees. This provision … places the burden on employees to understand the legal complexities of the MAA and the ramifications of opting out, within the time frame of only 30 days. This strikes me as patently skewed in favor of the employer and to make illusory any free choice on the part of employees to opt-out of the MAA. The employee must either accept the MAA or incur the burden of obtaining legal advice on short notice and running the risk that he or she might later be caught up in a dispute between legal experts over interpretation of the MAA and the opt-out provision.” Therefore, the NLRB affirmed the decision of the administrative judge and found that the MAA did violate section 8(a)(1) of the NLRA.