NLRB Changes Course on Mandatory Arbitration Agreements

In 2018, in Epic Systems Corp. v. Lewis, the U.S. Supreme Court stated that employers may require employees to sign arbitration agreements with class action waivers. Recently, the National Labor Relations Board (NLRB) took the Epic decision even further.

In Cordua Restaurants, Inc., the NLRB stated that the National Labor Relations Act (NLRA) does not prohibit employers from requiring employees, as a condition of employment, to sign an arbitration agreement with a class action waiver in response to an employee class action lawsuit for wage and hour violations under the Fair Labor Standards Act (FLSA). In fact, employers may terminate employees who fail or refuse to sign an arbitration agreement under these circumstances. However, employers may not discipline or discharge employees for filing a class action with fellow employees over wages, hours, or other terms and conditions of employment, which is considered concerted legal activity protected by the NLRA.

This may be interesting news for employers. However, the NLRB’s ruling does not directly impact what a court will do if an employer requires employees to sign arbitration agreements with class action waivers, for example, once a class has been certified, or before employees are notified of a pending class action. Employers should consult with legal counsel before taking these or similar steps.

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