NLRB Rules that Mandatory Arbitration Policy is a Violation of NLRA

Tuesday, July 25, 2006
The National Labor Relations Board recently ruled that employees cannot waive their right to file a charge with the Board in an employment agreement. U-Haul Co. of California, June 8, 2006.

The Board reasoned that an employer's mandatory arbitration policy, which never references the National Labor Relations Act, violates Sections 8(a)(1) and (4) of the Act because the policy did not inform employees they still had the right to file charges.

The arbitration policy in this case covered:

"All disputes relating to or arising out of an employee's employment with [the Company] or the termination of that employment. Examples of the type of disputes or claims covered by the [U-Haul Arbitration Policy] include, but are not limited to, claims for wrongful termination of employment, breach of contract, fraud, employment discrimination, harassment or retaliation under the Americans With Disabilities Act, the Age Discrimination in Employment act, Title VII of the Civil rights Act of 1964 and its amendments, the California Fair employment and Housing act or any other state or local anti-discrimination laws, tort claims, wage or overtime claims or other claims under the Labor Code, or any other legal or equitable claims and causes of action recognized by local, state or federal laws or regulations."

The NLRB found that:

1. Employees have a right to file unfair labor practice charges with the Board, and found the policy unenforceable as to NLRA claims.

2. The phrase "any other legal or equitable claims and causes of action recognized by local, state or federal law or regulations" reasonably would be construed by employees as prohibiting them from filing unfair labor practice charges with the Board.

3. Because the policy interfered with protected employee rights, the employer violated Sections 8(a)(1) and (4) of the Act. The Board ordered, among others, that the employer: a. rescind its arbitration policy at all facilities where it was in effect; b. post remedial notices at the facilities where the policy was in effect; c. remove from its files all unlawful waivers by employees; and d. notify in writing its present and former employees who executed such waivers that the waivers would not be used in any manner.

As a result of the above case, employers should review their mandatory arbitration policies and agreements, as well as any other waivers or releases of employee rights.
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