NLRB Orders California Grocery Chain to Revise Arbitration Agreement Banning Workers From Maintaining Class Actions

The National Labor Relations Board (“NLRB”) has once again ordered an employer to stop “[m]aintaining and/or enforcing a mandatory arbitration policy that requires employees, as a condition of employment, to waive the right to maintain class or collective actions in all forums, whether arbitral or judicial.”  In Ralph’s Grocery Co., No. 21–CA–073942 (February 23, 2016), a California security guard signed a four-page Mediation and Binding Arbitration Policy (“MBAP”) prior to beginning employment with Ralph’s supermarket chain.  The MBAP stated all future disputes between the parties must be decided through binding arbitration.  The agreement also prohibited employees from engaging in class or representative action claims.

Later, the worker filed a proposed class action lawsuit over a number of alleged wage and hour violations pursuant to the California Private Attorney General Act.  In response, Ralph’s filed a motion to compel the dispute to arbitration.  After a lengthy court battle, a California Superior Court ultimately denied the grocery chain’s motion.  Ralph’s then sought appellate review and the security guard filed a motion to dismiss the company’s request for an appeal.

Next, the employee filed a charge against her employer with the NLRB.  An administrative law judge (“ALJ”) found that Ralph’s violated Section 8(a)(1) of the National Labor Relations Act (“NLRA”) “by maintaining and enforcing a mandatory and binding arbitration policy which required employees to resolve employment related disputes exclusively through individual arbitration proceedings and to relinquish any right they have to resolve such disputes through collective or class action.”  The ALJ also determined the employer unlawfully maintained a policy “that employees reasonably would believe bars or restricts their right to engage in protected activity and/or file charges with the National Labor Relations Board,” and required workers “to maintain the confidentiality of the existence, content, and outcome of all arbitration proceedings.”

A divided NLRB panel agreed with the ALJ’s findings and stated:

Applying the Board’s decision in D. R. Horton, 357 NLRB No. 184 (2012), enf. denied in part, 737 F.3d 344 (5th Cir. 2013), the judge found that the Respondent violated Section 8(a)(1) of the Act by maintaining and enforcing a Mediation and Binding Arbitration Policy (“MBAP”) that required employees, as a condition of employment, to waive their rights to pursue class or collective actions in employment-related claims in all forums, whether arbitral or judicial. In Murphy Oil USA, Inc., 361 NLRB No. 72 (2014), enf. denied in relevant part 808 F.3d 1013 (5th Cir. 2015), the Board reaffirmed the relevant holdings of D. R. Horton, supra. Based on the judge’s application of D. R. Horton, and on our subsequent decision in Murphy Oil, we affirm the judge’s findings.

The Board ultimately prohibited Ralph’s from maintaining or enforcing that part of the MBAP which required workers “to waive the right to maintain class or collective actions.”  In addition, the NLRB ordered the grocery chain to revise the portion of the MBAP that addressed a worker’s rights under the NLRA because it was confusing and unclear.  The Board also stated the company may not require workers “to maintain the confidentiality of the existence, content, and outcome of all arbitration proceedings.”

The nation’s Fifth Circuit Court of Appeals is currently considering several petitions for review related to recent NLRB decisions ordering employers to remove class and collective action waivers from mandatory arbitration agreements signed by workers as a condition of employment.  Please stay tuned to Disputing for more on this interesting subject in the future!

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