September 16, 2019

September 16, 2019

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Supreme Court’s Epic Systems Decision on Arbitration Interpreted Broadly by Labor Board

An employer may lawfully issue to its employees a new or revised mandatory arbitration agreement containing a class- and collective-action waiver specifying that employment disputes are to be resolved by individualized arbitration, even if it was in response to employees opting into a collective action (such as a wage lawsuit), the National Labor Relations Board (NLRB) has ruled. Cordúa Restaurants, Inc.368 NLRB No. 43 (Aug. 14, 2019). The NLRB also concluded that the NLRA does not prohibit an employer from threatening to discharge an employee who refuses to sign such an agreement.

The Board also: (1) held that filing a class or collective action about wages, hours, or other terms and conditions of employment constitutes protected concerted activity under the NLRA and that it is a violation of the NLRA for an employer to discipline or discharge employees for filing such an action; and (2) issued a notice to show cause why allegations that several handbook rules were unlawful should not be remanded to the administrative law judge (ALJ) for further consideration in light of Boeing Co., 365 NLRB No. 154 (2017). In Boeing Co., the Board announced a new, more employer-friendly, standard for analyzing handbook rules. The ALJ had applied the previous, employee-friendly analysis.

Chairman John F. Ring was joined by Members Marvin E. Kaplan and William J. Emanuel in the majority opinion. Member Lauren McFerran dissented in part.

Facts

The employer maintained an arbitration agreement that required employees to waive their rights to “file, participate or proceed in class or collective actions … in any civil court or arbitration proceeding.” Seven employees filed a collective action in federal court alleging violations of state and federal wage laws. After several employees opted into the action, the employer distributed a revised arbitration agreement that, in addition to the prohibitions that existed in the previous agreement, prohibited employees from opting into collective actions. In response to two employees’ objections to signing the agreement, the supervisor told them, among other things, they would be removed from the schedule if they did not sign the agreement. The employer also discharged employee Steven Ramirez, allegedly for dishonesty. Ramirez had discussed wage issues with his coworkers and filed a collective action under the Fair Labor Standards Act (FLSA).

Holdings

After a trial, an NLRB ALJ, applying existing Board precedent (Murphy Oil USA, Inc., 361 NLRB 774 [2014]), found the employer had violated the NLRA by promulgating and maintaining the revised arbitration agreement. The Board reversed this holding based on the U.S. Supreme Court’s decision in Epic Systems Corp. v. Lewis, 138 S. Ct. 1612 (2018), where the Court held, reversing Murphy Oil, that class- and collective-action waivers in mandatory arbitration agreements do not violate the NLRA.

Regarding the timing of the revised arbitration agreement’s implementation, the Board also found that promulgating the agreement after the filing of (and in response to) the wage action did not violate the NLRA, even if filing the wage action could be considered protected concerted activity under Section 7 of the law. The Board quoted Epic Systems for the proposition that an agreement such as that under review “does not restrict Section 7 rights in any way.” The Board held that opting into a collective action is simply a required procedural step for an individual to be a plaintiff in a collective action. Therefore, an arbitration agreement prohibiting opting into a collective action also did not restrict Section 7 rights.

(The dissent argued that the employer’s promulgating the revised arbitration agreement was an attempt to discourage employees from engaging in protected activity. However, the Board rejected this view, deciding it did not send a message that would tend to discourage employees from engaging in any and all protected concerted activity in the future.)

The NLRB also reversed the ALJ’s finding that the employer violated the NLRA based on the supervisor’s statements to the objecting employees. The Board found that Epic Systems permits an employer to condition employment on an employee’s entering into an arbitration agreement containing a class- or collective-action waiver. Therefore, explaining to employees the lawful consequences of failing to sign the agreement did not violate the NLRA.

The NLRB also upheld the ALJ’s decision that employee Ramirez had been discharged unlawfully because he had discussed wage issues with his coworkers and filed an FLSA collective action alleging minimum wage and overtime violations. The Board held: (1) “longstanding Board precedent establish[es] that Section 7 protects employees when they discuss their wages and other terms and conditions of employment”; and (2) the filing of the FLSA collective action constituted protected concerted activity because “Section 7 has long been held to protect employees when they pursue legal claims concertedly.” (The Board also affirmed the ALJ’s decision that the employee’s request to access his personnel records was protected. It held that access to the records was sought for the purpose of verifying the employer’s compliance with its obligations under state and federal minimum wage laws, and the request “logically grew out of [the employee’s] protected concerted wage discussions with his coworkers.”)

Takeaways

Two important points can be gleaned from the NLRB’s decision:

  • The Board interprets Epic Systems broadly. Indeed, in a footnote, the NLRB quoted former member Harry I. Johnson for the proposition that “[p]rotecting employees from job-related retaliation is the mission of this agency. Determining the terms under which litigation or arbitration is to be conducted is not.”
  • Despite its broad application of Epic Systems, the Board has continued to adhere to traditional definitions of protected concerted activity, such as were present in this case.
Jackson Lewis P.C. © 2019

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Philip B. Rosen Jackson Lewis  Preventive Practices Lawyer & Collective Bargaining Attorney
Principal

Philip B. Rosen is a Principal in the New York City, New York, office of Jackson Lewis P.C. He is a member of the firm's Board of Directors and co-leads the firm's Labor and Preventive Practices Group. He joined the firm in 1979 and served as Managing Partner of the New York City office from 1989 to 2009.

Mr. Rosen lectures extensively, conducts management training, and advises clients with respect to legislative and regulatory initiatives, corporate strategies, business ethics, social media, reorganizations and reductions-...

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Jonathan J. Spitz, Jackson Lewis Law Firm, Labor Employment Attorney, Atlanta
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Jonathan J. Spitz is a Principal in the Atlanta, Georgia, office of Jackson Lewis P.C. He is Co-Leader of the firm’s Labor and Preventive Practices Group.

Mr. Spitz lectures extensively, conducts management training, and advises clients with respect to legislative and regulatory initiatives, corporate strategies, business ethics, social media issues and the changing regulatory landscape. He understands the practical and operational needs of corporate America, helping design pragmatic strategies to minimize risk and maximize performance. He has represented management in dozens of counter-organizing drives and participated in countless unfair labor practice proceedings, discrimination charges and other matters before the National Labor Relations Board, the Equal Employment Opportunity Commission and other federal and state administrative agencies, as well as in collective bargaining, arbitration and in employment litigation before state and federal courts. Mr. Spitz regularly counsels employers in employee relations and discipline and discharge matters, and also assists employers in drafting employment policies and in complying with the Family and Medical Leave Act, drug testing laws and regulations, the Americans with Disabilities Act and other federal and state employment laws.

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Howard Bloom, Jackson Lewis, labor union attorney, unfair practice investigations lawyer, employment legal counsel, bargaining law
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Howard M. Bloom is a Principal in the Boston, Massachusetts, office of Jackson Lewis P.C. He has practiced labor and employment law representing exclusively employers for more than 36 years.

Mr. Bloom counsels clients in a variety of industries on labor law issues. He trains and advises executives, managers and supervisors on union awareness and positive employee relations, and assists employers in connection with union card-signing efforts, traditional union representation and corporate campaigns, and union decertification...

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Eric R. Magnus, Jackson Lewis, Wage and Hour Class Defense Lawyer, Employment Matters Attorney
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Eric R. Magnus is a Shareholder in the Atlanta, Georgia, office of Jackson Lewis P.C. His practice is focused primarily on defending federal and state wage and hour class and collective actions in jurisdictions across the United States.

Mr. Magnus’ collective and class action practice focus primarily on “donning and doffing,” “off-the-clock” and misclassification wage and hour cases. Mr. Magnus has obtained summary judgment at the district and circuit court levels in Fair Labor Standards Act and state law cases across the...

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Stephanie L. Goutos is an Associate in the Albany, New York, office of Jackson Lewis P.C. Her practice is focused on general employment litigation and class action and complex litigation.

Prior to joining Jackson Lewis, Ms. Goutos was the Senior Attorney to the New York State Deputy Commissioner of Higher Education at the Department of Education. Ms. Goutos led negotiations with New York State teacher unions, administrative unions, and district superintendents, as well as provided counsel on a wide variety of education law issues. She has...

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