NLRB Chairman John Ring
NLRB Chairman John Ring

Employers can mandate arbitration agreements for employees who opt in to a collective action under the Fair Labor Standards Act or state wage-and-hour laws, and they can tell workers that they can be fired for not signing such agreements, the National Labor Relations Board said Wednesday.

But employers can’t fire or punish employees if they file class or collective actions in an effort to try to improve workplace conditions, the board said.

The decision, rendered in Cordúa Restaurants, Inc., 368 NLRB No. 43 (2019), was the first to address the lawfulness of employer conduct surrounding mandatory arbitration agreements since the Supreme Court’s Epic Systems ruling issued in 2018, the NLRB said. In Epic Systems v. Lewis, the court held that class- and collective-action waivers in mandatory arbitration agreements do not violate the NLRA, but the case left some questions unanswered.   ­­­­­­­­­­

“Because opting in to a collective action is merely a procedural step required in order to participate as a plaintiff in a collective action, it follows that an arbitration agreement that prohibits employees from opting in to a collective action does not restrict the exercise of Section 7 rights and, accordingly, does not violate the Act,” the board said in its decision. 

Section 7 of the National Labor Relations Act, according to the board, “guarantees employees ‘the right to self-organization, to form, join, or assist labor organizations, to bargain collectively through representatives of their own choosing, and to engage in other concerted activities for the purpose of collective bargaining or other mutual aid or protection,’ as well as the right ‘to refrain from any or all such activities.’ ”

Chairman John F. Ring was joined in the majority opinion by members Marvin E. Kaplan and William J. Emanuel. Member Lauren McFerran dissented in part.