Mandatory Arbitration Agreements Are Dead! Long Live Mandatory Arbitration Agreements!

The National Labor Relations Board continues to target mandatory arbitration agreements in employment contracts. From law firm Barger & Wolen:

“… the National Labor Relations Board has filed a formal complaint against 24 Hour Fitness, alleging the gym company’s arbitration opt-out policy compels employees to waive their rights to utilize the civil litigation system, and in particular, class actions… 24 Hour Fitness requires employees to opt out of the mandatory arbitration agreement within 30 days of receiving the employee handbook.”

For the NLRB, it’s a question of timing. Law firm Siegel O’Connor:

“The [NLRB] General Counsel has taken the position that this opt-out procedure is unlawful because it forces the employees to take exception to the mandatory arbitration policy on class actions very shortly after they are hired. In other words, in the view of the NLRB, the employer’s policy constitutes unlawful coercion because the newly hired workers are going to be reluctant to identify themselves as potential ‘troublemakers’ in the event they want to preserve their rights to file or join in a class action lawsuit or arbitration against 24 Hour Fitness.”

The latest complaint follows closely on the heels of the NLRB’s ruling (currently on appeal) that home builder D.R. Horton violated worker rights by forcing them to forgo their rights to “class or collective litigation of claims in any forum, arbitral or judicial.”

But the NLRB pressure does not necessarily signal the end of mandatory arbitration agreements. Recent court rulings have in fact taken the opposite position, setting up a what could become yet another showdown between the NLRB and the Courts. To wit:

  • “… in Quilloin v. Tenet Healthsystem Phila., Inc., the U.S. Court of Appeals for the Third Circuit … held that the nurse’s agreement to arbitrate was not unconscionable, and even if there were ambiguous provisions in the agreement, those provisions must be interpreted by the arbitrator, not the district court.” (Third Circuit Compels Arbitration in Meal Break Case and Finds No Basis for District Court’s Unconscionability Ruling by Duane Morris LLP)
  • “In … Oliveira v. Citicorp North America, Inc. and Citigroup, Inc., Judge Richard A. Lazzara of the Middle District of Florida held that a complete waiver of class and collective actions in either a judicial or arbitration forum was enforceable.” (Middle District Judge Disagrees With NLRB Over Class and Collective Action Waivers by Akerman Senterfitt)
  • In Sanders v. Swift Transp. Co. of Ariz., “Magistrate Judge Nathanael M. Cousins of the Northern District of California granted a motion to compel arbitration of the individual claims of the plaintiff in a putative class action alleging that the defendant transportation company had violated California labor laws.” (Courts Reject NLRB’s Ruling That Arbitration Agreements Violate NLRA by Morgan Lewis)
  • “… in Palmer v. Convergys Corp., Judge Hugh Lawson of the Middle District of Georgia granted the defendants’ motion to strike collective action FLSA allegations pursuant to class/collective action restrictions in an agreement signed by the plaintiffs.” (Courts Reject NLRB’s Ruling That Arbitration Agreements Violate NLRA)
  • “…in Johnmohammadi v. Bloomingdales, Inc., Judge George H. Wu of the Central District of California … explained that he was inclined to find the arbitration agreement enforceable despite the plaintiff’s reliance on D.R. Horton.” (Courts Reject NLRB’s Ruling That Arbitration Agreements Violate NLRA)

Where does all of this leave employers? Law firm Akerman Senterfitt:

“Given the divergent authority, employers are cautioned to review their arbitration agreements and to carefully consider whether to amend them. Until further notice, courts in the Eleventh Circuit will likely enforce such waivers in employment-related lawsuits, but this will not prevent the NLRB from bringing unfair labor practice charges against employers who have such agreements. It is expected that the Eleventh Circuit will soon be asked to consider the continued vitality of Caley and this issue may wind up in front of the Supreme Court.”

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