Hunton Employment & Labor Perspectives

As we have previously reported here and here, courts and the National Labor Relations Board (“NLRB”) have released a number of recent decisions favoring the enforceability of arbitration agreements in the employment context.

It is now settled law that class-action waivers in arbitration agreements do not violate the National Labor Relations Act (“the Act”) or infringe on employees’ Section 7 rights under the Act.  In a recent decision, the NLRB extended this holding to allow employers to implement arbitration programs—including those with class-action waivers—in direct response to litigation by its employees.

In Tarlton & Son, Inc., two employees brought a class-action wage and hour lawsuit against their employer in state court.  Soon after receiving a copy of the lawsuit, the company implemented a mandatory arbitration program that contained class-action waivers and required all employees to sign the agreement as a condition of their continued employment.  The two employees who initiated the class-action litigation filed an unfair labor practice charge, alleging that the arbitration program was unlawful because it was instituted in direct response to the employee’s class-action lawsuit and, therefore, was a direct attack on their rights to engage in concerted protected activity.

In dismissing the charge, the NLRB reasoned that the underlying arbitration program was lawful and held that the decision to implement the program (i.e., the filing of a class-action lawsuit against the company) did not transform an otherwise legal arbitration program into an unfair labor practice charge.

Though this decision is certainly another example of the NLRB embracing arbitration programs in the employment context, including those programs with class-action waivers, this decision could provide employers another tool in staving off costly class-action suits, even after they have been filed.