Huffington Post reported that Guitar Center was requiring all of its employees to choose between signing arbitration agreements or losing their jobs.
I have been critical of employers’ use of arbitration agreements because I do not believe that they provide employers with a quicker, cheaper, and less risky alternative to a judicial resolution of employment disputes.
The NLRB is also highly critical of arbitration agreements, but for a wholly different reason. The NLRB believes that such clauses unlawfully infringe on the rights of employees to engage in protected concerted activity.
In the days leading up the Christmas, the NLRB released 15 new opinions, and a staggering 13 of them concluded that the employer had promulgated an unlawful arbitration clause.
SolarCity Corp. [pdf] is the best example of the NLRB’s current stance in these cases.
SolarCity required that its employees sign a mandatory arbitration agreement, which included a class action waivers, but which also specifically carved out the right for employees to pursue claims with state and federal administrative agencies:
I understand that … this Agreement does not prohibit me from pursuing … claims with local, state, or federal administrative bodies or agencies authorized to enforce or administer employment related laws…. Such permitted agency claims include filing a charge or complaint with the U.S. Equal Employment Opportunity Commission, the National Labor Relations Board, the Department of Labor, the Occupational Safety and Health Commission, and the National Labor Relations Board.Notwithstanding that carve-out, the NLRB still concluded that the arbitration agreement violated the NLRA:
We also recognize—as the Board has done before—that “[r]ank-and-file employees do not generally carry lawbooks to work or apply legal analysis to company rules as do lawyers, and cannot be expected to have the expertise to examine company rules from a legal standpoint.”
As described, the Agreements state explicitly that “all” or “any disputes” must be individually arbitrated, thereby conveying to employees that, as a condition of employment, they must forfeit their substantive Section 7 right to act collectively in pursuing an employment dispute in any other forum.
Viewed from an employee’s perspective, … it would take “specialized legal knowledge” to determine whether employees’ right to file Board charges is permitted or precluded by these caveats. Rather than drafting a provision that clearly informs employees that they have the unconditional right to file charges with the Board, the language chosen by the Respondent restrains employees from exercising this protected right out of fear that doing so would run afoul of the caveats.In other words, at least under current Board law, if an employer wants an arbitration agreement to pass NLRB scrutiny, it must, clearly and unequivocally, state that employees have an affirmative right to file a charge with the NLRB.
To me, the SolarCity carve-out is fairly clear and unambiguous on this issue. Be cautious when considering and rolling out arbitration and class-action waiver agreements to your employees, because the NLRB is closely watching.
Image via Cleveland.com.