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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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Discussing Job Security is a Protected Activity, NLRB Finds

The NLRB found that an employer violated Section 7 of the NLRA when it fired an employee for discussing job security with a co-worker.

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A vending-machine route driver left work early one Friday without notifying management, which is a violation of company policy. That weekend, she noticed a local ‘help wanted’ ad for a vending-machine route driver. She assumed it was her company that had placed the ad and that she was going to be fired.

When she returned to work the following Monday, she and another route driver discussed the ad. She asked her co-worker if he thought the ad meant their company was going to fire someone, but the co-worker thought she was implying he was going to be fired. The second driver went to the owners of the company and expressed his concern about losing his job.

The owner assured him that he would not be fired and asked why he was worried. The other route driver mentioned his conversation about the ‘help wanted’ ad. The company eventually fired the first driver – the one who ducked out of work on Friday – for gossiping and telling other employees they were going to be fired.

The NLRB Steps In

In a 2-1 majority ruling, the NLRB found that the driver’s termination violated the National Labor Relations Act (NLRA) because discussion of job security concerns with her co-worker were “inherently concerted,” and therefore considered protected concerted activity, even though there wasn’t any evidence that they were “engaged in with the express object of inducing group action.”

Conversations among employees are generally protected when they consider group action. However, the contemplation of group action is not required when the conversation is “inherently concerted.” Since job security discussions, like wages, are a vital conditions of employment, the NLRB held that they are inherently concerted.

The company was ordered to reinstate the driver with full back pay.

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Can Employees Talk About Their Pay?

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Protected Concerted Activity and Section 7 of the NLRA

Section 7 of the NLRA protects employees who engage in concerted activity for the purpose of mutual aid or protection. Section 8 of that Act makes it unlawful for an employer to “interfere with, restrain, or coerce” an employee for engaging in such activity.

What Does This Mean For Employers?

Determining whether employee activity is protected under the NLRA ultimately depends on the specific facts of each case. However, it is clear from recent NLRB rulings that taking corrective action based on work-related conversations among employees can lead to trouble with the NLRB.

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Federal Contractors: Posting Requirement Stands

A challenge opposing a pro-union workplace posting lost in U.S. District Court.

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President Obama issued Executive Order 13496 in 2009, which prompted the U.S. Department of Labor to release a new workplace posting for Federal contractors, Employee Rights Under the National Labor Relations Act. The posting reminds employees of contractors with contracts from the Federal government valued at $100,000 or more that they have the right to organize a union and use collective bargaining.

Two groups representing Federal contractors took the posting and its rule to court and lost.

The National Association of Manufacturers and Virginia Manufacturers Association argued that the regulations compelled speech in violation of the First Amendment and that the President and Department of Labor lacked the authority to issue the rule (Civil No. 1:13-cv-01998).

On the first charge, the trade group representatives argued that employers would be forced to communicate a pro-union message to workers, even if participating companies held other opinions about unions. The Court, however, determined that:

“…the Posting Rule does not require a contractor to speak at all. Rather, the contractor is required to host government speech as a condition of receipt of a federal contract. That, of course, presents a contractor with a choice—agree to post the Notice or forgo federal contracting.”

Government contractors and subcontractors involved in Federal contracts valued at $100,000 or more are required to post the notice:

“…in conspicuous places in and about [their] plants and offices where employees covered by the National Labor Relations Act engage in activities relating to the performance of the contract, including all places where notices to employees are customarily posted both physically and electronically.” [29 C.F.R. § 471, Subpt. A, App. A.]

Contractors covered by the rule who fail to display the posting risk having their contracts with Federal agencies cancelled.

Employers may recall the NLRB posting debacle of 2011 wherein the Board tried issuing a posting required for U.S. employers. Two different Courts ruled they lacked both the authority to issue posting requirements and the power of enforcement.

In the more recent case of E.O. 13496, however, the combined authority of President Obama and the DOL make for power only the Wonder Twins could dream of.

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