NLRA Allows Collective Action Waivers in Arbitration Agreements

The National Labor Relations Board (NLRB) has ruled that arbitration agreements containing provisions barring class or collective action do not violate the National Labor Relations Act (NLRA). Additionally, the NLRB ruled that an employer may legally terminate the employment of an employee who refuses to sign an arbitration agreement with class or collective action waivers included in its language. The ruling affirms existing precedent regarding arbitration agreements, although it also departs from precedent in allowing such an agreement to be considered valid, even when it was distributed in response to a collective action it was attempting to halt.

In Cordúa Restaurants, Inc. and Steven Ramirez and Rogelio Morales and Shearone Lewis, 368 NLRB No. 43 (2019), the NLRB examined a case where multiple employees of a restaurant chain filed a collective action against their employer. As more employees joined the action, the court authorized a class action against the employer. The employer, in response, issued a modified arbitration agreement to its employees barring both class and collective actions against it, and required them to sign the agreement or else face termination.

The NLRB ruled that the NLRA did not prohibit an employer from barring class or collective action by its employees through an arbitration agreement. Moreover, it could do so even if the arbitration agreement with the provisions waiving the employees’ rights to collective and class action were imposed after said actions had already been initiated, and it could legally fire an employee who refused to sign the arbitration agreement. This means the original collective action was dismissed, and instead will be resolved in private arbitration.

Notably, one of the NLRB members dissented in this case, noting longstanding precedent that showed employer actions in response to employee collective action were generally held to be in violation of labor law. However, the majority of the NLRB’s members disagreed, noting that no part of the arbitration agreement was illegal, nor was conditioning employment on the signing of a lawful arbitration agreement. In the end, it demonstrates the extent to which employers may still impinge upon labor rights, despite the legal protections that exist for employees.

If you are looking into unionizing, or you already have a union and are in a dispute with your employer, give the Law Offices of Steve Sack a call. Steven Mitchell Sack, the Employee’s Lawyer, is a New York employment lawyer who has considerable experience in handling the many aspects of labor and employment law. To schedule a consultation with New York City employment lawyer Steve Mitchell Sack, call (917) 371-8000.

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