Arbitration Agreement May Not Restrict Access to NLRB Processes

By Chad M. Horton - Shawe Rosenthal LLP

June 19, 2019

In a rare unanimous decision, on a closely-watched issue, from all four sitting members of an ideologically-divided National Labor Relations Board, the Board ruled that an employer’s arbitration agreement unlawfully restricted employee access to the Board and its processes.

In Prime Healthcare Paradise Valley, the agreement in question stated that binding arbitration would serve as the exclusive forum for resolution of covered claims. Covered claims included a long list of employment statutes and “claims for violation of any federal, state, or other government constitution, statute, ordinance regulation, or public policy.” While the agreement specifically excluded certain claims, none of the exclusions covered charges of unlawful conduct filed with the Board, with any other administrative agency, or with administrative agencies generally.

Because the agreement did not explicitly interfere with employees’ rights under Section 7 of the National Labor Relations Act to file charges with the Board, the Board applied its Boeing framework to analyze the facially neutral arbitration provision. Under Boeing, the Board evaluates (i) the nature and extent of a rule’s impact on rights under the Act, and (ii) an employer’s legitimate justifications associated with the rule. As to the first prong of the Boeing framework, the Board found that the agreement, when reasonably interpreted, restricted employees’ statutory right to file charges with the Board. Next, the employer advanced no justification for the rule. But the Board went further, holding that, as a matter of law, “there is not and cannot be any legitimate justification for provisions, in an arbitration agreement or otherwise, that restrict employee access to the Board or its processes.” Accordingly, the Board found that the agreement violated the NLRA.

This case warns employers to ensure that their arbitration agreements – as well as severance agreements and employee handbooks – do not include provisions that either explicitly restrict employees’ ability to access the Board (e.g., file a charge), or can be reasonably read to do so. This issue can be avoided with a clause expressly stating that the agreement does not restrict an employee’s right to file a charge with the Board, or any other administrative agency (like the EEOC, which similarly prohibits employers from restricting employees’ right to file a charge of discrimination).