Two Big Wins for Workers Through the NLRB

Two recent Court of Appeals decisions have affirmed important NLRB rulings that protect workers’ rights.

First, many workers—usually those who are not represented by a Union or covered by a collective bargaining agreement—are increasingly being forced by their employers, usually at the time of hire, to sign “mandatory arbitration agreements.”  In general, by signing the agreements, workers agree to take work-related claims to arbitration, rather than to court.  Employers tell workers that these agreements are a term of employment; if they don’t like the agreement, then they don’t have to work there.  The National Labor Relations Board (NLRB) ruled in DR Horton and Murphy Oil that when these types of agreements go so far as to prohibit workers from bringing claims as a group, for example, in a class action, the agreements are illegal.  The NLRB explained that preventing workers from coming together to enforce their legal rights in the work place is an improper restriction on workers’ rights to engage in protected concerted activity under the National Labor Relations Act (NLRA). 

In a recent decision, Lewis v. Epic Systems, the Seventh Circuit Court of Appeals broke ranks with the Second, Fifth, and Eighth Circuits, and, agreeing with the NLRB, found that mandatory arbitration agreements in employment contracts that prohibit workers from joining in collective or class actions violate an employee’s Section 7 right to engage in the concerted protected activity.  This decision affirmed the analysis used in the NLRB’s DR Horton and Murphy Oil decisions which similarly found mandatory arbitration agreements with class action waivers violate the NLRA.  The Lewis decision creates a split in the Circuit Courts of Appeal, and thus increases the likelihood that the U.S. Supreme Court will hear the issue.  The Ninth Circuit has not yet weighed in, but a decision in Morris v. Ernst & Young LLP is expected shortly.   

Second, the NLRB implemented new election rules, effective April 2015, which apply in the context of new organizing, as well as in decertification elections.  The NLRB implemented these new rules to streamline the election process.  In Associated Builders and Contractors v. NLRB, the Fifth Circuit addressed a facial challenge to the NLRB’s new election rules.  In this challenge, the Associated Builders and Contractors (ABC) argued that the NLRB exceeded its authority and failed to comply with the Administrative Procedures Act when it enacted the new rules. The Fifth Circuit court firmly disagreed and upheld the NLRB’s right to enact such rules. 

Unless the ABC appeals and the U.S. Supreme Court agrees to hear the case, litigation regarding the implementation of the new rules is now completed, and the rules will stand.

For more information about mandatory arbitration agreements outside of collective bargaining agreements, and the NLRB’s election rules, contact your labor law counsel. 

By Caren Sencer | July 5, 2016

Legal Developments