NLRB — Employers Facing Litigation Can Modify Existing Arbitration Agreements to Include Class Action Waivers, Penalize Employees Who Refuse to Sign
On Wednesday, August 14, the National Labor Relations Board (NLRB) ruled that an employer can add a class action waiver to an existing employment agreement containing a mandatory arbitration provision. While this result was not surprising in light of the Supreme Court’s 2018 decision in Epic Systems, the NLRB’s decision was significant because it ruled that an employer can make this change even when litigation is already pending, effectively preventing employees from opting in to an existing collective action. Further, the NLRB ruled that an employer can discharge an employee who refuses to sign such a revised agreement. While the NLRB reaffirmed that an employer cannot take any adverse employment action against an employee who either brings or opts in to a collective action, an employer can require employees to sign the revised agreement as a condition of continued employment without running afoul of the National Labor Relations Act. Cordua Restaurants, Inc. NLRB 16-CA-160901.
Prior to this ruling, employers facing litigation were often reluctant to implement mandatory arbitration agreements or modify existing agreements to add class action waivers for fear of facing a claim that such an action would violate the NLRA. The Cordua decision puts that fear to rest and serves as another reminder to review your employment and dispute resolution agreements to ensure that these agreements provide as much protection as possible.