‘Vague’ Savings Clause Insufficient to Save Arbitration Agreement Limiting Employees’ Access to NLRB

An arbitration agreement requiring that all “claims or controversies in any way relating to or associated with … employment or the termination of … employment … will be resolved exclusively by binding arbitration,” including “all statutory… claims” violated the National Labor Relations Act (NLRA), the National Labor Relations Board (NLRB) has ruled.

The Board, applying Boeing Co., 365 NLRB No. 154 (2017), found that the agreement made arbitration the exclusive forum for the resolution of statutory claims under the NLRA, which violates the NLRA. Cedars-Sinai Medical Center, 368 NLRB No. 83 (Sept. 30, 2019). The Board categorized the agreement as a Category 3 policy under Boeing. (For more on Boeing and its category approach to employer rules, see our articles Labor Board Sets New Standard for Determining Lawfulness of Facially Neutral Workplace Rules and Labor Board Clarifies Boeing Work Rules Decision, Finds Confidentiality, Media Contact Rules Lawful).

The Board rejected the employer’s defense that the agreement’s “savings clause,” which provided that the agreement “does not apply to . . . claims . . . that are preempted by federal labor laws,” was sufficient to communicate to employees that claims under the NLRA were not covered. Citing Prime Healthcare Paradise Valley, LLC, 368 NLRB No. 10 (2019), where the Board also held an arbitration agreement unlawfully prohibited the filing of claims with the NLRB, the Board noted that:

[v] ague savings clauses that would require employees to “meticulously determine the state of the law” themselves are likely to interfere with the exercise of NLRA rights. Such clauses include, for example, those stating that “nothing in this agreement shall be construed to require any claim to be arbitrated if an agreement to arbitrate such claim is prohibited by law,” that exclusively require arbitration limits that requirement to circumstances where a claim “may lawfully be resolved by arbitration.”

The Board held that the phrase “preempted by federal labor laws” was vague and that an “objectively reasonable employee … reading this vague language would not divine an implicit intent to exclude claims arising under the Act.”

The Board contrasted that savings clause with the one in the arbitration agreement under review in Briad Wenco, 368 NLRB No. 72 (2019). The savings clause there stated: “Nothing in this Agreement shall be construed to prohibit any current or former employee from filing any charge or complaint or participating in any investigation or proceeding conducted by an administrative agency, including but not limited to … the National Labor Relations Board ….”

In addition to its determinations regarding the lawfulness of the arbitration agreement, the Board also held that the company’s action for declaratory judgment in state court did not violate the NLRA. In light of the U.S. Supreme Court’s decision in Epic Systems, 138 S.Ct. 1612 (2018), the Board held that the company could lawfully seek to compel individual, rather than class, arbitration through a complaint in state court.

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Employers should evaluate whether their arbitration agreements clearly inform employees of their right to file charges with the NLRB. Employers should not rely on a vague savings clause to communicate to employees that employees still can file unfair labor practice charges at the NLRB.

Please contact a Jackson Lewis attorney for questions about this case, the NLRB, or assistance in implementing or reviewing an employee dispute resolution program.