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NLRB’s Administrative Law Judge Finds Employer’s Mandatory Arbitration Provision Violates the National Labor Relations Act

Non-union employers often think that they do not need to concern themselves with the National Labor Relations Act (the “Act”).  This is a misconception.  For example, Section 7 of the Act gives employees the right to not only form labor unions and engage in collective bargaining, but also “to engage in other concerted activities for the purpose of…mutual aid or protection.”  Stated differently, Section 7 prohibits employers from interfering with all employees’ rights to bring group complaints to the employer and improve their working conditions, both collectively and individually.

One application of Section 7 rights in a non-union setting is to mandatory arbitration provisions, or “MAPs,” that some employers include in their employment agreements and employee handbooks.   

While seemingly routine, MAPs leave employers vulnerable to Section 7 charges because, under the current NLRB law, Section 7 protects employees in seeking to improve their working conditions through resort to court and agencies like the NLRB.  Consequently, an employer violates the Act when he requires employees to sign a MAP that would make the employees think they cannot file a charge with the NLRB. 

What if the employer makes a clear exception for charges with the NLRB? Wouldn’t that shield the employer from violating the Act?  Not necessarily. 

Recently, an Administrative Law Judge for the NLRB ruled in The Neiman Marcus Group, Inc., 198 LRRM 1696 (2014), that even a MAP thatspecifically advised the employee he or she may file an NLRB claim still violated Section 7 the Act.  The ALJ found that the employees could nevertheless believe that they did not have resort to the NLRB because, essentially, the exception was overshadowed by other provisions of the agreement.

The Neiman Marcus case highlights the need for careful drafting of employee arbitration agreements.  Moreover, this thorny area of the law remains in flux.  We provide assistance to employers in drafting employee arbitration agreements.