NLRB Approves Mandatory Arbitration Agreement Rollout During Pending Litigation

Labor & Employment Workforce Watch
October 2019

Last May, in Epic Systems Corp. v. Lewis, 584 U.S. __, 138 S.Ct. 1612 (2018), the United States Supreme Court held that employee agreements waiving workers’ rights to class and collective actions, and requiring individualized arbitration to resolve employment disputes, did not violate the National Labor Relations Act. This summer, the National Labor Relations Board issued its first major decision post-Epic Systems. In Cordúa Restaurants, Inc., 368 NLRB No. 43 (2019), an employer required its employees to sign an arbitration agreement that waived the right to file or participate in class and collective actions. Seven workers filed a collective action lawsuit claiming their employer violated state and federal wage laws, and at least one of the workers discussed the lawsuit and wage issues more generally with his coworkers. After other employees opted into the lawsuit, the employer updated its arbitration policy to require employees to agree not to opt in to collective actions. Many employees signed the new updated agreement. One of the employer’s management staff then advised two holdout workers that he wouldn’t “bite the hand that feeds me” and that he would “go ahead and sign it.” These statements arguably implied consequences for the employees’ failure to sign.

The Board concluded that under Epic Systems, the employer was free to have a policy requiring employees to agree to arbitration with collective action waivers, which was not surprising: Epic Systems blessed a similar policy. In addition, the Board concluded that, under Epic Systems, the employer was free to condition employment on signing such an agreement while a collective action was pending—and management was likewise free to advise workers, however colorfully, of the consequences of failing to sign. What the employer was not free to do, however, was fire a worker from engaging in protected activity, namely discussing wage issues with his coworkers and ultimately filing suit alleging violations of wage laws.

While Epic Systems offered employers a green light to institute mandatory arbitration agreements with class and collective action waivers, Cordúa takes that case one step further by allowing employers to roll those agreements out while a class or collective action against them is pending. At the same time, Cordúa confirms the Board’s longstanding precedent of prohibiting adverse action against employees engaged in protected activity—including protected activity related to collective action—still exists. Employers should review their arbitration policies and practices in light of Cordúa.