NLRB Forces Employer to Rescind Arbitration Agreements

The National Labor Relations Board (NLRB) recently forced an employer to rescind arbitration agreements with numerous past and current employees. The NLRB is the administrative decision-making body charged with enforcing the National Labor Relations Act (NLRA), a labor law that protects employees who band together to improve the terms and conditions of their employment.

Under NLRB guidance, employers cannot generally enact any policy or make any rule that would interfere with employees’ rights under the NLRA. The NLRB recently applied this rule in the Prime Healthcare decision. In that case, Prime Healthcare, the employer, had a standard arbitration agreement with its employees. The agreement contained broad language that all claims or controversies had to be brought in arbitration. There were only limited exceptions for claims like workers’ compensation or unemployment.

NLRB’s Two-Step Evaluation Process

The NLRB evaluated the agreement using a two-step process: (1) When reasonably interpreted, could the agreement potentially interfere with NLRA-protected rights? (2) What is the potential impact on employees versus the legitimate justifications of the employer?

One could reasonably interpret the broad language in the arbitration agreements as requiring the resolution of NLRA violations through arbitration, rather than the administrative process. The Board determined that there was no legitimate justification and identified a significant risk of impairing employees’ rights.

Therefore, the NLRB ordered the employer to rescind the agreement and to notify all past and current employees that the arbitration provision was no longer in effect. A carefully worded arbitration agreement could have avoided this whole situation.

Employers Should Seek Legal Review

Finally, employers should regularly have a skilled attorney review their employment contracts, arbitration agreements, and handbooks. They can comply with labor laws and avoid NLRB issues by doing this. Stay informed and proactive in protecting the rights of your employees and maintaining fair labor practices.

If you want a review of your employment contracts or arbitration agreements, contact our business law team. Contact Fausone & Grysko, PLC by phone at (248) 380-0000 or visit www.FB-Firm.com.