NLRB Refuses to Approve Withdrawal of ULP Charge Parties Agreed to in Wage and Hour Settlement | Practical Law

NLRB Refuses to Approve Withdrawal of ULP Charge Parties Agreed to in Wage and Hour Settlement | Practical Law

In Flyte Tyme Worldwide, the National Labor Relations Board (NLRB) denied employees' request to withdraw an unfair labor practice (ULP) charge against their employer stemming from the employer's mandatory arbitration policy that contained a class and collective action waiver requirement. Although the parties had agreed to a settlement of the related wage and hour class and collective action, the Board denied the ULP withdrawl request because the settlement did not effectuate the greater National Labor Relations Act (NLRA) purposes of preventing ULPs and ensuring employees' rights to engage in collective action concerning terms and conditions of employment.

NLRB Refuses to Approve Withdrawal of ULP Charge Parties Agreed to in Wage and Hour Settlement

by Practical Law Labor & Employment
Published on 07 Apr 2015 • USA (National/Federal)
In Flyte Tyme Worldwide, the National Labor Relations Board (NLRB) denied employees' request to withdraw an unfair labor practice (ULP) charge against their employer stemming from the employer's mandatory arbitration policy that contained a class and collective action waiver requirement. Although the parties had agreed to a settlement of the related wage and hour class and collective action, the Board denied the ULP withdrawl request because the settlement did not effectuate the greater National Labor Relations Act (NLRA) purposes of preventing ULPs and ensuring employees' rights to engage in collective action concerning terms and conditions of employment.
On March 30, 2015, in Flyte Tyme Worldwide, the panel (Board) heading the NLRB's judicial functions denied the charging party's motion to withdraw an unfair labor practice charge against the employer stemming from a mandatory arbitration policy that contained a class and collective action waiver requirement. Although the parties reached a settlement of the matter in a separate but related class action wage and hour lawsuit, the Board found that the settlement did not effectuate the greater NLRA purposes of preventing unfair labor practices and ensuring employees' rights to engage in collective action concerning terms of employment (362 N.L.R.B. slip op. 46 (Mar. 30, 2015).)

Background

Flyte Time Worldwide filed a motion to dismiss a class action wage and hour lawsuit and to compel arbitration based on its mandatory arbitration policy that also contained a class and collective action waiver. Relying on D.R. Horton, Inc., an ALJ found that Flyte Time violated Section 8(a)(1) of the NLRA by:
  • Having an Arbitration Agreement Policy (AAP) that requires employees to arbitrate all employment-related claims and to waive their right to maintain collective or class actions in all forums.
  • Filing a motion to dismiss the class action wage and hour lawsuit filed by employees and to compel arbitration under the AAP.
(357 N.L.R.B. slip op. 184 (2012).)
While the case was pending before the Board after exceptions were filed to the ALJ's decision, the parties reached a class-wide settlement agreement on the wage and hour suit. As part of the settlement, the parties agreed to request withdrawal of the ULP charge. However, the settlement was not contingent upon the Board's approval of the withdrawal of the charge.

Outcome

The Board:
  • Denied the motion to withdraw the ULP charge.
  • Stated that it would continue to consider the underlying ULP and review the exceptions filed to the ALJ's decision.
The Board based its decision on the following:
  • Approving the settlement agreement and withdrawal of the charge would not give effect to the purposes of the NLRA.
  • The settlement agreement:
    • addressed the employees' private rights under federal and state wage and hour laws, but not the public interest in protecting employees' statutory right to engage in collective action regarding terms and conditions of employment;
    • left in place the AAP's requirement that employees waive, as a condition of employment, the filing of class and collective claims in all forums;
    • failed to rescind or modify the waivers already executed by employees pursuant to the AAP; and
    • would continue to have a chilling effect on employees' Section 7 rights in the future.
The Board noted its previous holdings in Murphy Oil USA, Inc. that:
  • An employer violates Section 8(a)(1) by forcing employees to resolve claims through individual arbitration and give up their rights to collective or class actions (361 N.L.R.B. slip op. 72 (2014)).
  • An employee's right to engage in collective action to improve working conditions is the core of the NLRA (361 N.L.R.B. slip op. 72 (2014)).

Practical Implications

In Flyte Tyme Worldwide, the NLRB's stated commitment to encouraging mutually agreeable settlements without litigation did not trump its desire to prevent ULPs on a larger scale. The NLRB found that while allowing withdrawal of the employees' charge would have resolved the instant matter, it would not prevent the employer from committing the same alleged ULP in the future. Therefore, when settling a lawsuit that has a parallel NLRB proceeding in these circumstances, employers should consider conditioning the settlement payment upon the Board granting the charging party's motion to withdraw the related ULP charge (rather than on the charging or settling party's request that the charge be withdrawn). Otherwise, employers risk being responsible for remedies under the NLRA in addition to and on top of the litigation settlement sum.