NLRB Continues to Assert Class Waivers in Employment Agreements Violate the NLRA

The National Labor Relations Board (“NLRB”) is at it again. In Service Employees Int’l Union v. Montecito Heights Healthcare & Wellness Centre, LP, No. 31-CA-129747 (November 30, 2016), an NLRB administrative law judge ruled that a California-based nursing home maintained an illegal voluntary arbitration policy that asked workers to waive their right to engage in collective action in violation of the National Labor Relations Act (“NLRA”).  Interestingly, the NLRB’s 2014 decision in Murphy Oil was cited in the judge’s seven page opinion.  The Board’s ruling in Murphy Oil was later overturned by the nation’s Fifth Circuit Court of Appeals.

In response to the nursing home’s claim that the arbitration policy did not violate the NLRA because it was voluntary, the administrative law judge stated:

In my opinion, this case is controlled by the Board’s decision in Murphy Oil USA, Inc., 361 NLRB No. 72 (2014), enf. denied, 808 F.3d 1013 (5th Cir., Oct. 26, 2015).  In that and subsequent cases, the Board has held that requiring employees to sign class action waivers, with or without an “opt out” clause, is a violation of Section 8(a)(1) of the Act.

The Respondent asserts that its ADR policy does not infringe on Section 7 rights because the policy was optional and not required as a condition of employment. Strictly speaking, the policy does not require employees to execute the proferred “Agreement to be bound by Alternative Dispute Resolution Policy.” But one has to wonder how many employees, 25 being asked to sign the document, typically at the start of their employment, would have sufficient knowledge to even consider refusing to sign it.

Even so, the Board’s position is that an employer will violate the Act whether or not an ADR policy is mandatory or voluntary. …

The NLRB judge concluded, “By maintaining a policy that seeks to require employees to waive their right to bring class actions or to act concertedly in regard to their wages, hours and terms and conditions of employment, the Respondent has violated Section 8(a)(1) of the Act.”

Ultimately, the administrative law judge ordered the nursing home to cease and desist from maintaining its voluntary arbitration policy.

The NLRB has petitioned the Supreme Court of the United States for certiorari in the Murphy Oil case.  In addition, a number of other petitions related to the issue of whether a collective or class arbitration waiver that is included in an employment agreement violates the NLRA are currently being reviewed by the nation’s high court.

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