NLRB Guidance Memorandum Addresses Class Waivers in Mandatory Arbitration Agreements

The National Labor Relations Board’s (NLRB) general counsel (GC) has issued guidance (pdf) to the agency’s regional officers and directors on how to process unfair labor practice (ULP) charges involving employee class action waivers in mandatory arbitration agreements. The GC explained that questions have arisen “regarding the validity of mandatory arbitration agreements that prohibit arbitrators from hearing class action employment claims while at the same time requiring employees to waive their right to file any claims in a court of law, including class action claims.” In essence, the GC concluded that such class action waivers do not per se violate the National Labor Relations Act’s (NLRA) provisions allowing employees to engage in protected, concerted activity, but that certain principles must be followed.

Specifically, the guidance memorandum explains that class action lawsuits that are filed by employees for their mutual aid and protection implicate NLRA rights. Not all class action lawsuits or grievances, however, involve protected concerted activity, and should therefore continue to be analyzed under the usual standard for “concerted activity.” If an employer threatens, disciplines or discharges an employee for such concerted activity, the GC would conclude that an employer is in violation of the NLRA. Similarly, a mandatory arbitration agreement that could reasonably be read by an employee as prohibiting him or her from joining with other employees to file a class action lawsuit is overly broad and thus unlawful.

Nonetheless, the GC emphasizes that pursuant to Supreme Court and Circuit Court precedent, it is not an automatic NLRA violation for employers to require individual employees to sign, as a condition of employment, a waiver of their right to file a class or collective non-NLRA employment claim. By the same token, no ULP is committed when such an individual agreement is enforced. It follows that an employee covered by a valid class action waiver is still protected under the NLRA if he or she concertedly files an employment-related class action lawsuit.

In essence, the NLRB guidance reaffirms an employer’s right to include class action waivers in mandatory arbitration policies, but such agreements should contain language acknowledging an employee’s right to concertedly challenge the agreement and stating that any employee who chooses to do so will not be subject to discipline or retaliation.

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Information contained in this publication is intended for informational purposes only and does not constitute legal advice or opinion, nor is it a substitute for the professional judgment of an attorney.