NLRB Rules in Favor of Employment Arbitration

This week, the National Labor Relations Board issued a significant ruling in the case of Cordúa Restaurants.  Specifically, the Board held that:

• The NLRA does not prohibit employers from telling employees that failing or refusing to sign an arbitration agreement will result in their discipline or discharge.
• The NLRA does not prohibit employers from promulgating mandatory arbitration agreements after employees have opted into a collective action under the FLSA or state law.
• The NLRA does prohibit employers from taking adverse action against employees for engaging in concerted activity by filing a class or collective action.

The nuance of this decision is apparent. An employer may require employees to sign an arbitration agreement after they have opted into a class or collective FLSA action, but the employer may not take adverse action its employees because they opted into the class or collective action.

Last year the Supreme Court told us in Epic Systems that employers could require employees to enter into arbitration agreements that prohibit class or collective actions.  The NLRB’s new opinion further strengthens employers’ authority to require their employees to sign such agreements.  Although Cordúa indicates that employers could require an employee to sign an arbitration agreement after the employee has filed or opted into a class or collective action, it would be much safer to implement an arbitration program before you are faced with a FLSA collective action.

As I have said previously, arbitration agreements are not the end-all, and they can have some negative consequences.  But, it is certainly worth the time to analyze whether using this type of a dispute resolution system might be a good idea for your business.

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