Sixth Circuit: Arbitration Provisions Prohibiting Concerted Protected Activity are Unenforceable

In Alternative Entertainment, Inc., employees were required to sign, as a condition of employment, a mandatory arbitration agreement containing a provision that barred employees from bringing collective actions against the employer.  Alternative also prohibited employees from discussing wage information.

A former employee sued after he was terminated for repeatedly complaining about the company’s policies on compensation.  The Sixth Circuit stated that Alternative’s arbitration agreement violated both the NLRA and the Federal Arbitration Act (“FAA”). In reaching this decision, the Sixth Circuit considered and refuted two arguments the Fifth Circuit made, finding that: (A) the NLRA does not override or conflict with the FAA; and (B) workers’ rights under the NLRA to pursue litigation in all forums qualifies as a substantive right protected by Section 7 of the NLRA.

Though the Sixth Circuit decision has further deepened the split in authority among circuit courts, the “final say” in this ongoing matter is still pending U.S. Supreme Court review.  ManagEase will continue to report on this developing area of law.

Action Items

1. Review employment and arbitration agreements containing class action waivers with labor counsel and revise, if necessary.
2. Subscribers can call our HR On-Call Hotline at (888) 378-2456 for further assistance.

Disclaimer: This document is designed to provide general information and guidance concerning employment-related issues. It is presented with the understanding that ManagEase is not engaged in rendering any legal opinions. If a legal opinion is needed, please contact the services of your own legal adviser.

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