NLRB Permits Employer to Implement Arbitration Agreement in Response to Class Action Lawsuit

NLRB Permits Employer to Implement Arbitration Agreement in Response to Class Action Lawsuit

On August 14, 2019, the National Labor Relations Board in Cordúa Restaurants, Inc. held that employers are not prohibited by the National Labor Relations Act from informing employees that their failing or refusing to sign a mandatory arbitration agreement will result in their discharge, and that employers may promulgate such agreements in response to employees opting into a collective action under the Fair Labor Standards Act or state wage-and-hour laws. The Board’s decision in Cordúa Restaurants, Inc. follows the U.S. Supreme Court’s 2018 Epic Systems decision holding that class- and collective-action waivers in mandatory arbitration agreements do not violate the NLRA and must be enforced as written pursuant to the Federal Arbitration Act.

Employers must still exercise care when preparing and implementing mandatory arbitration agreements. Agreements that employees could reasonably interpret as limiting their right to file unfair labor practice charges with the NLRB are prohibited. Similarly, the NLRA prohibits an employer from taking adverse action against an employee because he or she engaged in “protected concerted activity,” including filing a class or collective action over wages, hours, or other terms and conditions of employment. In Cordúa Restaurants, Inc., the Board affirmed an administrative law judge’s conclusion that the employer had violated the NLRA by terminating an employee because he had discussed wage issues with his coworkers, requested access to his personnel records, and filed a collective action alleging minimum wage and overtime violations.