Have a mandatory arbitration policy or contract? Considering one? There are certainly benefits. But, there are also some cons to consider. Continuing its attack on the traditionally acceptable policies and practices of non-unionized employers, the National Labor Relations Board (NLRB) recently ruled that a non-union company’s mandatory grievance and arbitration policy violated the National Labor Relations Act (NLRA). As noted in last month’s newsletter, the validity of this ruling is also shrouded in legal limbo until the D.C. Court of Appeals’ opinion that declared the Board’s decisions invalid for lack of a lawful quorum is reviewed en banc (by all of the D.C. Circuit’s Judges) or appealed to the U.S. Supreme Court. In the mean time, employers must decide whether they will act in light of the Board’s ruling or take the riskier approach and ignore it. For those employers that aren’t so risk tolerant, here are some lessons from the case.

Supply Technologies, a non-unionized employer, implemented a mandatory arbitration program for resolving most employment disputes to avoid costly suits in federal or state court. It required all employees to sign an arbitration agreement and fired 20 employees who refused. The agreement required “any claim of any kind” to be resolved by arbitration except for three kinds of claims: criminal matters, workers’ compensation claims, and unemployment claims. The agreement also allowed employees the freedom to file a charge or complaint with a “government agency” and cooperate with agency investigations, which would presumably include the NLRB. Yet, the NLRB declared that the agreement violated the NLRA because employees would reasonably construe its language to prohibit them from filing unfair labor practice charges or from accessing other Board processes. The Board founded its holding primarily upon two factors: (1) the broad, all-encompassing nature of the agreement’s coverage clause-“any claim of any kind”-and (2) its narrow, explicit list of exclusions that did not expressly mention the NLRB or unfair labor practice charges. For these reasons, the NLRB decided that an employee would reasonably view the agreement as covering claims arising under every law, even those not listed, except for the three specific kinds of claims that were expressly carved out.

If you have a mandatory arbitration policy or contract, or if you’re considering one, you should think about including express language clarifying that unfair labor practice charges and other NLRB proceedings are among the types of claims that are excluded from mandatory arbitration. Otherwise, you run the risk that the policy will be deemed unlawful and unenforceable (at least until such time as the D.C. Court of Appeals’ decision is affirmed, which remains an open question). Beyond that, it would be wise to conduct a careful review of all of your policies and employment contract provisions to ensure they comply with current Board decisions and do not restrict employees’ Section 7 rights.

By Christopher S. Thrutchley, cthrutchley@dsda.com