NLRB Halts Mandatory Arbitration Agreements

One employer’s attempt to bake-in arbitration agreements as a condition of employment left a bad taste in the NLRB’s mouth.

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PJ Cheese, Inc. is part of a Papa John’s Pizza franchise (PJ United, Inc.) that employs more than 3,000 employees in Alabama, Louisiana, Texas, Ohio, Tennessee, Illinois, Missouri, Mississippi, and Virginia.

The employer developed a Dispute Resolution Program (DRP. Pronounced just like it’s spelled.) PJ Cheese intended its DRP to settle employment disputes in arbitration, out of court, and definitely out of the crosshairs of the National Labor Relations Board (NLRB).

Oh, the irony.

Instead, PJ Cheese found their Dispute Resolution Program chewed up and spit out. (PJ Cheese, Inc. and James Sullivan).

The language of PJ Cheese’s Dispute Resolution Program explicitly informed applicants and employees that “submission of an application, acceptance of employment or the continuation of employment by an individual shall be deemed to be acceptance of the Dispute Resolution Program.”

And no signature required! How convenient. The NLRB decision referred to this as a “self-executing document”.

PJ Cheese’s DRP – in big, bold capital letters – further expounded:

CONDITION OF YOUR EMPLOYMENT AND IS THE EXCLUSIVE MEANS BY WHICH THOSE PROBLEMS MAY BE RESOLVED.

Ah, now there’s the problem.

NLRB Affirms Administrative Law Court Ruling

Administrative Law Judge William “Wild Bill” Nelson “Rockefeller” Cates found the language of the DRP to quash workers’ ability to pursue class or collective judicial action allowed under Section 7 of the National Labor Relations Act (NLRA). An arbitration policy like PJ Cheese’s DRP also violated the NLRA by causing workers to believe they are prohibited from filing unfair labor practice charges with the NLRB.

The DRP tried to push workers to settle in arbitration claims such as:

  • Wages
  • Breach of any contract
  • Wrongful termination
  • Sexual harassment
  • Discrimination
  • “Whistleblower” claims

PJ Cheese’s DRP flew too close to the sun, and its cheesy wings melted into gooey defeat when the NLRB affirmed with the judge’s original decision. As a result of the decision, PJ Cheese must:

  • Cease and desist from maintaining a mandatory arbitration agreement that bars employees from filing charges with the NLRB.
  • Rescind the unlawful arbitration agreement or revise it in all of its forms to make clear to employees that the arbitration agreement does not constitute a waiver of their right to take joint, class, or collective actions against their employer or file charges with the NLRB.
  • Notify all current and former employees who were required to sign the unlawful arbitration agreement that it has been rescinded or revised and, if revised, provide them a copy of the revised agreement.
  • Post copies of a Notice to Employees that disclose employees’ rights to not be subject to binding arbitration agreements in lieu of the Section 7 and Section 8 rights under the NLRA.

What the NLRB Ruling on Mandatory Arbitration Means for Employers

Long story short: any mandatory arbitration policy that contains provisions unlawfully prohibiting employees from engaging in protected concerted activities and that leads employees reasonably to believe they are prohibited from filing charges with the NLRB will not stand.

Under federal law, employees have the right to act together with other employees for mutual benefit and protection and to file claims with the NLRB. Therefore, employers in the U.S. cannot maintain nor can they enforce a mandatory and binding arbitration agreement that requires employees, as a condition of employment, to waive the right to maintain class or collective actions in all forums, whether in arbitration or in court.

Have your legal team review your employee arbitration process to ensure it doesn’t run afoul of the NLRA.

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  1. NLRB Halts Mandatory Arbitration Agreements – GovDocs

    Good to know! Super busy with email marketing work for ILM Legal Services. Looking forward to the Easter break! 🐣

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