NLRB Issues Multiple Decisions Ordering California Companies to Rescind Provisions of Arbitration Agreements Waiving Employee’s Rights to Bring Class or Collective Actions

Author: Regina Silva

In a wave of decisions by the National Labor Relations Board (“NLRB”), the NLRB has rejected company’s arbitration agreements which contain class action waivers finding these class action waivers violate the employee’s statutory rights to engage in concerted activity with other employees.

BRISTOL FARMS NLRB DECISION

In Bristol Farms and Konny Renteria (NLRB Case No. 21-CA-103030, November 2015), Renteria previously filed a class action case in California state court against Bristol Farms for various wage/hour violations.  In response to the state lawsuit, Bristol Farms filed a motion to compel arbitration of his claims, Bristol Farms also sought dismissal of the class claims based on an arbitration agreement Renteria signed which provided his claims against the company be arbitrated and further argued he waived his right to file to pursue a class action lawsuit.

Renteria then filed an unfair labor practice charge with the NLRB against Bristol Farms claiming the company’s arbitration agreement was unlawful on several grounds, including that it was unlawful to require him to waive his right to pursue a class action lawsuit.  The Adminstrative Law Judge (“ALJ”) for the NLRB found Bristol Farms violated the National Labor Relations Act (“NLRA”) by its pursuit of a mandatory arbitration agreement.

Thereafter, as part of the proposed settlement of the unfair labor practice charge, Bristol Farms sought to revise its arbitration agreement to provide the agreement was voluntary, and that employees had the right to pursue charges with the NLRB.  The proposed Settlement Agreement also set forth an explicit class and collection action waiver.  The Regional Office for the NLRB rejected this proposal indicating the arbitration agreement could not interfere with an employee’s right to engage in class action litigation.

Bristol Farms then took the issue to the NLRB, who ruled consistent with its earlier decision in On Assignment Staffing Services (362 NLRB No. 189 (2015)) that “an arbitration agreement that precludes collective action in all forums is unlawful even if entered into voluntarily, because it requires employees to prospectively waive their … right to engage in concerted activity.”  

JACK-IN-THE-BOX NLRB DECISION

Separately, on December 1, 2015, in an unfair labor practice charge brought against San Diego based Jack in the Box, Inc., another ALJ for the NLRB ruled the company’s Arbitration Agreement was unlawful on several grounds including because it interfered with the employees’ rights to engage in collective legal activity such as participating in collective and class litigation.  (Jack in the Box, Inc. and Dana OCampo (Case 32-CA-145068).  The unfair labor practice charge was brought by an employee who challenged the company’s arbitration agreement on several grounds.

In reviewing the company’s arbitration agreement, the ALJ noted there was no doubt a term and condition of employment with Jack in the Box was that an employee forfeited their substantive right to act in concert by filing a collective or class action lawsuit asserting violations of wage, hours, or working conditions.  The ALJ ruled based on the entire record, “by requiring employee to act individually by precluding them from participating in collective and class arbitration or litigation, the Arbitration Agreement interferes with the core substantive workers’ Section 7 right: the ability to act in concert in support of one another.”

Hence, the ALJ ordered, among other things, the class action waiver in Jack in the Box’s Arbitration Agreement be rescinded or revised to make it clear employees did not waive their right to bring a class or collective action.

The ALJ’s decision in Jack in the Box is consistent with the NLRB’s trend of rejecting class action waivers contained in employer’s arbitration agreements.  While Jack in the Box will likely appeal the decision to the NLRB next, the NLRB will likely affirm the ALJ’s ruling.

TAKE AWAY

The NLRB’s numerous opinions holding class action waivers are prohibited in Arbitration Agreements is contrary to state and federal court decisions upholding these waivers.  Moreover, it is troublesome an employee who is prevented from pursuing a class action lawsuit in a California state court due to a class action wavier in an arbitration agreement, can simply turn around and file an unfair practice charge with the NLRB against his/her employer for violation of their rights to engage in concerted activity.

We anticipate the next step for companies who have been subjected to the NLRB’s finding their class action waivers are unlawful is to pursue an appeal with the Court of Appeals after the decision becomes binding by the NLRB.

 

ABOUT THE AUTHOR

Ms. Silva is a graduate of University of the Pacific. She is the head of the firm’s Employment Practices Group. She is a former prosecutor and has considerable trial experience. Contact her at rsilva@tysonmendes.com.

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