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The NLRB Upholds Mandatory Arbitration Agreements

August 28, 2019

On August 14, 2019, the National Labor Relations Board (the “Board”) issued its decision in Cordúa Restaurants, Inc., 368 NLRB No. 43 (2019) and ruled that requiring employees to sign arbitration agreements containing class and collective action waivers did not violate the National Labor Relations Act (the “Act”).

Cordúa is the Board’s first case addressing mandatory arbitration agreements since the Supreme Court ruled last year in Epic Systems Corp. v. Lewis that class and collective action waivers mandating employment disputes be resolved by individualized arbitration did not violate the Act. Although the Supreme Court’s ruling was welcomed news for employers, it left certain questions unanswered. In Cordúa, the Board addressed the following open questions:

  1. Whether mandating that employees sign a class and collective action waiver as a condition of employment violates the Act?
    No. According to the Board, it is lawful under the Act for employers to maintain and/or enforce arbitration agreements that require employees, as a condition of employment, to waive their right to pursue employment disputes through class or collective actions.
  2. Whether implementing or revising arbitration agreements to include class and collective action waivers after a class or collective action lawsuit has been filed violates the Act?
    No.
  3. Whether an employer violates the Act by informing employees that they may be disciplined or discharged if they refuse to sign an arbitration agreement?
    No.
  4. Whether discharging an employee for filing a wage and hour class or collective action violates the Act?
    Yes. Employers are prohibited under the Act from discharging or taking other adverse actions against employees for engaging in protected concerted activities by filing a wage and hour class or collective action.

Arbitration agreements remain an important tool for employers to consider in possibly avoiding large, costly wage and hour class and collective actions. For more information or guidance on arbitration agreements, please contact one of Honigman’s Labor and Employment attorneys.