NLRB Pans Janitor Mandatory Arbitration Agreement Despite NLRB Charge Exclusions | Practical Law

NLRB Pans Janitor Mandatory Arbitration Agreement Despite NLRB Charge Exclusions | Practical Law

In Professional Janitorial Services of Houston, the National Labor Relations Board (NLRB) held that if an employer's arbitration policy fails to include a sufficiently clear statement that all claims arising under the National Labor Relations Act (NLRA), without limitation, are excluded from the policy's coverage, employees would reasonably conclude that the employer's arbitration policy required the arbitration of claims that might otherwise be filed as unfair labor practice (ULP) charges with the NLRB.

NLRB Pans Janitor Mandatory Arbitration Agreement Despite NLRB Charge Exclusions

Practical Law Legal Update w-001-0035 (Approx. 8 pages)

NLRB Pans Janitor Mandatory Arbitration Agreement Despite NLRB Charge Exclusions

by Practical Law Labor & Employment
Published on 01 Dec 2015 • USA (National/Federal)
In Professional Janitorial Services of Houston, the National Labor Relations Board (NLRB) held that if an employer's arbitration policy fails to include a sufficiently clear statement that all claims arising under the National Labor Relations Act (NLRA), without limitation, are excluded from the policy's coverage, employees would reasonably conclude that the employer's arbitration policy required the arbitration of claims that might otherwise be filed as unfair labor practice (ULP) charges with the NLRB.
On November 24, 2015, in Professional Janitorial Services of Houston, the majority of the panel (Board) heading the NLRB's judicial functions held that despite some NLRB charge exclusions, the employer's arbitration policy violated Section 8(a)(1) of the NLRA because employees would reasonably construe it to interfere with their access to NLRB processes and their ability to exercise their rights under the NLRA. The Board panel unanimously concluded that the confidentiality provision of the arbitration policy independently violated Section 8(a)(1). (363 NLRB No. 35 (Nov. 24, 2015).)
Professional Janitorial Services of Houston maintained an arbitration policy that required employees as a condition of employment to waive their right to pursue class or collective employment actions in any arbitral or judicial forum. Among the language within the arbitration policy was the following:
"Application and Coverage: The [Arbitration Policy] applies to all employees, regardless of length of service or status, and covers all disputes relating to or arising out of an employee's employment with the Company or the termination of employment. The only disputes or claims not covered by this policy are those described below in the Exclusions and Restrictions section. Examples of the type of disputes or claims covered by this policy . . . include but are not limited to, claims for wrongful termination of employment, breach of contract . . . or any other legal claims and causes of action recognized by local, state or federal law or regulations."
"Exclusions and Restrictions: Certain issues may not be submitted for review (or exclusive review) by arbitration. Excluded Issues: . . . In addition, any non-waivable statutory claims, which may include wage claims within the jurisdiction of a local or state labor commission or administrative agency, charges before the Equal Employment Opportunity Commission, National Labor Relations Board, or similar local or state agencies, are not subject to exclusive review by arbitration. This means that you may file such non-waivable statutory claims with the appropriate agency that has jurisdiction over them if you wish, regardless of whether you use arbitration to resolve them. However, if such an agency completes its processing of your action against the Company, you must use arbitration if you wish to pursue further your legal rights, rather than filing a lawsuit on the action."
"Agreement to Arbitrate: I . . . agree to submit to final and binding arbitration any and all claims and disputes that are related in any way to my employment or the termination of my employment with PJS. I understand that final and binding arbitration will be the sole and exclusive remedy for any such claim or dispute against PJS or any affiliated entities, and each of their employees, officers, directors or agents . . . ."
The majority of the Board panel (Chairman Pearce and Member McFerran):
The Board majority found that:
  • The "Application and Coverage" section of the arbitration policy stated that the policy applied to all employment disputes aside from those that fell within the "Exclusions and Restrictions" section.
  • The final page's "Agreement to Arbitrate" clause required employers to agree to submit to arbitration, but made no reference to any exceptions or exclusions. This clause included broad language indicating that all employment-related disputes must be arbitrated.
  • The "Exclusions and Restrictions" section did not clearly except from coverage all disputes that could form the basis of NLRB charges, because:
    • the language exempts non-waivable statutory claims that may include charges before the NLRB. This language states that a dispute before the NLRB might be exempt (if it is a non-waivable statutory claim), not that all disputes covered by the NLRA are exempt;
    • based on the misleading language, employees could reasonably believe that by agreeing to the policy, they waived the right to bring certain disputes before the NLRB (even if the policy does not require them to waive the right to all claims before the NLRB);
    • the term "non-waivable statutory claim" cannot be expected to convey clear meaning to employees, who may not be familiar with what situation is defined as a particular type of dispute. It cannot be presumed that employees are knowledgeable about the NLRA or its scope of coverage (McDonnell Douglas Corp., 240 NLRB 794, 802 (1979)); and
    • employees might reasonably read the portion of the policy requiring post-agency arbitration as a requirement that their claims be resolved through arbitration. The policy "strongly suggests" to employees that even if they file NLRB charges, that they might be required to go to arbitration.
  • Workplace rules that prohibit the discussion of terms and conditions of employment (like the confidentiality provision in Professional Janitorial, which prohibits employees from discussing any "statements and information made or revealed during arbitration") are unlawfully overbroad (see Rio All-Suites Hotel & Casino, 362 NLRB No. 190, slip op. at 1–3).
  • The arbitration agreement's class action waiver was unlawful (D. R. Horton, 357 NLRB No. 184; Murphy Oil USA, 361 NLRB No. 72).
Member Miscimarra dissented in part, concluding that:
  • The NLRA creates no substantive right for employees to insist on class or collective treatment of non-NLRA claims.
  • An agreement requiring waiver of class actions pertaining to non-NLRA claims does not infringe on any NLRA rights (a large majority of courts have rejected the Board's position regarding agreements requiring the waiver of the right to bring a class action).
  • Enforcement of a class-action waiver as part of an arbitration agreement is also warranted by the Federal Arbitration Act (FAA).
  • The arbitration policy was unlawful not because the exclusions section was ambiguous or misleading, but because the unqualified language over the employee's signature in the "Agreement to Arbitrate" section put all disputes through arbitration, contradicting whatever impact the earlier NLRA exclusions could have effected.
  • The confidentiality provision in the arbitration agreement was unlawful because it constrained potential concerted discussions of employment terms and conditions and the employer introduced no record evidence of a countervailing interest that justifies the impact on NLRA-protected rights (as he would have required in line with his dissent in Banner Estrella Medical Center, 362 NLRB No. 137, slip op. at 13–19 (June 26, 2015); see Legal Update, HR Rep Unlawfully Requested That Employees Keep Workplace Investigation Confidential: NLRB). Member Miscimarra declined to rely on Rio All-Suites Hotel & Casino.
Member Miscimarra noted that he dissented for more reasons to the majority's analysis of class action waivers previously explained in his partial dissent in Murphy Oil (361 NLRB No. 72, slip op. at 22–35; see Legal Update, NLRB Redoubles Stance that Mandatory Arbitration Clauses Waiving Employees' Rights to Pursue Class or Collective Actions Violate the NLRA).

UPDATE

In Epic Systems Corp. v. Lewis, the US Supreme Court held that arbitration agreements with class and collective action waivers are not prohibited under Section 7 of the NLRA and must be enforced as written under the Federal Arbitration Act (FAA). The decision invalidates the NLRB's analysis in D.R. Horton and Murphy Oil on which this decision relies and therefore abrogates much of the analysis in this case (( (U.S. May 21, 2018); see Legal Update, SCOTUS: Arbitration Agreements with Class Action Waivers Must Be Enforced as Written, and NLRA Does Not Command Otherwise and Article, Expert Q&A on Class Action Waivers in the Employment Context.)