NLRA Disclaimer Does Not Save Arbitration Policy, Murphy Oil Holdings Persist: NLRB | Practical Law

NLRA Disclaimer Does Not Save Arbitration Policy, Murphy Oil Holdings Persist: NLRB | Practical Law

In Amex Card Services Co., the National Labor Relations Board (NLRB) held that the employer unlawfully maintained a mandatory arbitration policy with class and collective action waivers. Unlike the policies in other D.R. Horton and Murphy Oil progeny, the Amex policy contained a disclaimer that it did not apply to NLRA claims and was not intended to preclude employees from exercising their rights under the National Labor Relations Act (NLRA), including to file unfair labor practice (ULP) charges with the NLRB.

NLRA Disclaimer Does Not Save Arbitration Policy, Murphy Oil Holdings Persist: NLRB

Practical Law Legal Update w-000-7541 (Approx. 8 pages)

NLRA Disclaimer Does Not Save Arbitration Policy, Murphy Oil Holdings Persist: NLRB

by Practical Law Labor & Employment
Published on 17 Nov 2015 • USA (National/Federal)
In Amex Card Services Co., the National Labor Relations Board (NLRB) held that the employer unlawfully maintained a mandatory arbitration policy with class and collective action waivers. Unlike the policies in other D.R. Horton and Murphy Oil progeny, the Amex policy contained a disclaimer that it did not apply to NLRA claims and was not intended to preclude employees from exercising their rights under the National Labor Relations Act (NLRA), including to file unfair labor practice (ULP) charges with the NLRB.
On November 10, 2015, in Amex Card Services Co., the panel (Board) heading the NLRB's judicial functions held that the employer unlawfully required employees as a condition of employment to agree to arbitrate any employment claim individually. Unlike the policies in other D.R. Horton and Murphy Oil progeny, the Amex policy contained a disclaimer that it did not apply to NLRA claims and was not intended to preclude employees from exercising their rights under the NLRA, including by filing unfair labor practice (ULP) charges. Despite the disclaimers, the Board found the policy infringed on rights to pursue employment claims concertedly on its face and would reasonably be understood by employees to preclude them from accessing NLRB processes. (363 NLRB No. 40 (Nov. 10, 2015).)

Background

Amex Card Services Company, maintained an "American Express Company Employment Arbitration Policy" and, as a condition of employment, required newly hired employees to sign a "New Hire Employment Arbitration Policy Acknowledgement Form", in which employees acknowledge their agreement with the terms of the Policy.
The policy states, in part, that:
"The agreement between each individual and American Express to be bound to the Policy creates a contract requiring both parties to resolve all employment-related disputes that are based on a legal claim through final and binding arbitration. Arbitration is the exclusive forum for the resolution of such disputes, and the parties mutually waive their right to a trial before a judge or jury in federal or state court in favor of arbitration under the Policy."
"All claims subject to arbitration under this Policy MUST be submitted on an individual basis. THERE SHALL BE NO RIGHT OR AUTHORITY FOR ANY CLAIMS TO BE ARBITRATED ON A CLASS OR COLLECTIVE BASIS . . . . No party subject to this Policy shall have any right to participate in a representative capacity or as a member of a class of claimants in a court of law pertaining to any claims subject to arbitration."
"Any claim under the National Labor Relations Act" is not covered.
It "does not preclude an individual from filing a claim or charge with a governmental administrative agency with independent statutory authority to pursue an enforcement action, such as the National Labor Relations Board . . . ."The form states, in part:
"I understand that arbitration is the final and exclusive forum for the resolution of employment-related disputes between American Express and me that are based on a legal claim."
"I agree to submit any and all employment-related disputes based on a legal claim to arbitration, and agree to waive my right to trial before a judge or jury in federal or state court in favor of arbitration under the Policy."
"[The employee] shall have no right or authority for any claim to be arbitrated on a class action basis[, and that he or she] will not have the right to participate in a representative capacity or a member of any class of claimants in a court of law pertaining to any claims subject to arbitration."
The form does not specify NLRA-related exemptions like the policy.
Five former nonunion employees from Amex's Phoenix office filed an FLSA lawsuit. A federal district court granted Amex's motion to compel individual arbitration and to dismiss the lawsuit because the dispute was covered by the acknowledged arbitration policy (Longnecker v. Am. Exp. Co., (D. Ariz. Apr. 21, 2014)).

Outcome

A three-member Board panel (Chairman Pearce and Members Hirozawa and McFerran; Member Miscimarra was recused) held that an employer violates Section 8(a)(1) of the NLRA by:
  • Maintaining a mandatory arbitration agreement that:
    • was facially invalid because it required employees to, as a condition of employment, waive the right to engage in the concerted protected activity of bringing class or collective actions in all forums; or
    • employees would reasonably believe might restrict them from filing charges with the NLRB.
  • Enforcing the rules of an arbitration policy by maintaining a cause of action compelling arbitration.
The Board further:

Practical Implications

This case adds to the D.R. Horton and Murphy Oil line of cases by denying the effect of NLRA-related disclaimers in an arbitration policy. Employers must include these disclaimers in all arbitration-related documents to have a chance at being lawful under the access to NLRB processes analysis. The Board declined to decide whether an arbitration policy that, in fact, permitted administrative-agency access would be lawful under the rationale of D.R. Horton and Murphy Oil. Federal appellate courts have been more willing to affirm the Board's analysis of arbitration policies that employees might interpret as foreclosing access to NLRB processes based on "arbitration as exclusive remedy" types of language.
This is the first occasion since the Fifth Circuit's decision in Murphy Oil for the Board to decide whether it would acquiesce to the Fifth Circuit's continuing analysis that collective and class actions are procedural mechanisms rather than substantive rights under the NLRA. As predicted, the Board has not (see Legal Update, Fifth Circuit Continues to Reject NLRB's Analysis of Mandatory Arbitration Agreements; NLRB Shows No Sign of Acquiescing).

UPDATE

In Epic Systems Corp. v. Lewis, the US Supreme Court held that arbitration agreements with class and collective action waivers are not prohibited under Section 7 of the NLRA and must be enforced as written under the Federal Arbitration Act (FAA). The decision invalidates the NLRB's analysis in D.R. Horton and Murphy Oil on which this decision relies and therefore abrogates much of the analysis in this case (( (U.S. May 21, 2018); see Legal Update, SCOTUS: Arbitration Agreements with Class Action Waivers Must Be Enforced as Written, and NLRA Does Not Command Otherwise and Article, Expert Q&A on Class Action Waivers in the Employment Context.)