On February 26, 2020, the National Labor Relations Board unveiled the final version of its rule for determining joint-employer status under the National Labor Relations Act. The Final Rule, which can be found here and which will take effect on April 27, 2020, will return to the “substantial direct and immediate control” standard. READ MORE
As states continue to pass legislation focused on the workplace, employers should be mindful that federal agencies are also continuing to regulate the workplace even in the absence of new federal legislation, especially with respect to when disputes arise regarding compensation and working conditions. Section 7 of the National Labor Relations Act (“Act”) arguably protects an employees’, including non-union employees’, rights to engage in concerted activities, including circumstances where an employee’s profane language or sexually- or racially- offensive speech is legally protected. Following criticism from the judiciary, the National Labor Relations Board (“NLRB”) announced this month it is now seeking input on the scope and applicability of this protection. READ MORE
Arbitration agreements are a powerful tool in resolving employment actions. As we noted last year, the U.S. Supreme Court ruled in a landmark case that employers can use class and collective action waivers in mandatory arbitration agreements. The U.S. Supreme Court’s 5-4 decision in Epic Systems Corp. v. Lewis, No. 160285 (U.S. May 21, 2018), was authored by Justice Gorsuch, and settled the longstanding dispute over whether arbitration agreements containing class waivers are enforceable under the Federal Arbitration Act (FAA) despite the provisions of Section 7 of the National Labor Relations Act (the Act).
On August 14, 2019, the National Labor Relations Board (NLRB) issued Cordúa Restaurants, Inc., 368 NLRB No. 43 (2019), in which the NLRB sided with employers on two key arbitration questions following the Epic decision. First, the NLRB found that an employer that is sued in a class or collective action can update its existing mandatory arbitration agreement to include a class or collective action waiver, barring workers from opting in to the pending litigation. What’s more, the NLRB found that employers can warn workers that failure to sign the updated arbitration agreement will result in termination.
Employers can update an existing mandatory arbitration agreement to include a class or collective action waiver, even after workers have opted in to the collective action:
The NLRB first addressed the issue of “whether the Act prohibits employers from promulgating [mandatory arbitration] agreements in response to employees opting in to a collective action.” In Cordúa Restaurants, Inc., Cordúa Restaurants had an existing mandatory arbitration agreement that required employees to waive their “right to file, participate or proceed in class or collective actions (including a Fair Labor Standards Act (‘FLSA’) collective action) in any civil court or arbitration proceeding,” but did not expressly prohibit opting in to collective actions. Seven employees filed a collective action in the United States District Court for the Southern District of Texas alleging violations of the FLSA and the Texas Minimum Wage Act. After thirteen employees opted in to the collective action, Cordúa Restaurants updated their existing mandatory arbitration agreement to expressly require employees to agree not to opt in to collective actions. Although the NLRB, for purposes of the decision, assumed that opting in to a collective action constitutes protected concerted activity under Section 7 of the Act, it still found that promulgating the updated mandatory arbitration agreement in response to the opt-ins did not violate the Act. The Board reasoned that Epic made clear that an agreement requiring that employment-related claims be resolved through individual arbitration, instead of class or collective action, does not restrict Section 7 rights in any way.
Employers can warn workers that failure to sign the updated arbitration agreement will result in termination:
The NLRB next tackled the issue of “whether the Act prohibits employers from threatening to discharge an employee who refuses to sign a mandatory arbitration agreement.” After updating the mandatory arbitration agreement to include the above provision against opting in to collective actions, Cordúa Restaurants needed to distribute and execute these updated agreements. During a pre-shift meeting, an assistant manager distributed the updated agreement to employees and explained that employees would be removed from the schedule if they declined to sign it. After a couple employees objected to signing the updated agreement, the assistant manager stated that he “wouldn’t bite the hand that feeds [him]” and that he would instead “go ahead and sign it.” The NLRB reasoned that because Epic permits employers to condition employment on employees entering into an arbitration agreement that contains a class or collective action waiver, the assistant manager did not unlawfully threaten the employees.
The majority opinion was authored by Chairman John F. Ring, Member Marvin E. Kaplan, and Member William J. Emanuel. Member Lauren McFerran authored a separate dissent, which disagreed with the majority on both issues and found that, “[t]he record here establishes that [Cordúa Restaurants] violated Section 8(a)(1) [of the Act] by imposing the revised arbitration agreement on employees, in response to their protected concerted activity and by threatening employees for protesting the revised agreement.” Member McFerran reasoned that although Epic blessed the use of mandatory arbitration agreements with class or collective action waivers, promulgating a lawful rule or policy in response to protected concerted activity is prohibited under Board law. Lastly, Member McFerran found that the employees exercised their Section 7 rights by protesting the updated agreement and the assistant manager unlawfully threatened them.
In its news release, the NLRB recognized that Cordúa Restaurants, Inc. is its first decision concerning the lawfulness of employer conduct surrounding mandatory arbitration agreements since Epic. It remains to be seen how state or district courts analyze a fact pattern such as this one, but this is a very encouraging development for employers if this is a sign of what’s to come from the NLRB. The decision strengthens employers’ power to effectuate mandatory arbitration agreements—now before and during pending litigation.
In the age of smartphones, virtually everyone has a recording device at his or her fingertips—including employees. This can present challenges in the workplace. For example, smartphones and other technology enable employees to secretly (read: illegally) record business meetings, disciplinary discussions with HR, and interactions with other employees. Not only does this violate privacy rights and trust, it also risks disclosing confidential company or employee information. Fortunately, employers are not without a remedy. California’s privacy laws offer protection against illegal recordings by employees. READ MORE
With a new Republican majority in the NLRB, the rules may be changing (again) when it comes to company emails. The NLRB is in the process of re-analyzing when and how employers can restrict employees’ company email use without running afoul of NLRA Section 7, and may begin upholding employer policies with facially neutral restrictions on company email and computer usage again in the near future.
A bit of background: Section 7 of the NLRA protects an employee’s right to engage in “concerted activities,” which occurs “when two or more employees take action for their mutual aid or protection regarding terms and conditions of employment.” The NLRA’s protection of “concerted activities” is a broader concept than “union activities” and covers many different activities, including employee discussions about pay, work conditions, and safety concerns. The NLRB has construed the terms “concerted” and “protected” very broadly and vaguely, to include any activity aimed at affecting employee interests.
Employers across the country started the work week with some positive and long-awaited news. On Monday, May 21, 2018, the U.S. Supreme Court ruled in a landmark case that employment arbitration agreements with class action waivers do not violate federal labor law. The Court’s 5-4 decision in Epic Systems Corp. v. Lewis, No. 160285 (U.S. May 21, 2018), consolidated with Ernst & Young LLP et al v. Morris et al., No. 16-300, and National Labor Relations Board v. Murphy Oil USA, Inc., et al. , No. 16-307, was authored by Justice Gorsuch, and settles the longstanding dispute over whether arbitration agreements containing class waivers are enforceable under the Federal Arbitration Act (FAA) despite the provisions of Section 7 of the National Labor Relations Act (NLRA). READ MORE
The NLRB continues to find fault with employers who discipline or terminate employees for sending emails discussing the terms and conditions of employment.
When four restaurant workers at Mexican Radio responded to a group email from former employee Annette Polanco complaining about the wages, work schedules, tip policy, and the treatment of workers, the now-closed Manhattan location of the chain responded by preparing reprimands and then terminating their employment. READ MORE
As a result of recent activity at the D.C. Circuit and the National Labor Relations Board (the “NLRB”), the joint employer standard is in a state of flux. On April 6, 2018, the D.C. Circuit decided that it will review the NLRB’s ruling in Browning-Ferris Industries of California, Inc. (“Browning-Ferris”), a controversial decision concluding that a company and its contractor could be found to be joint employers even if the company did not exert overt control over workers’ terms and conditions of employment. In December 2017, the D.C. Circuit remanded the case in light of the NLRB’s decision in Hy-Brand Industrial Contractors, Ltd. and Brandt Construction Co. (“Hy-Brand”), which overruled the broad Browning-Ferris standard for joint employment and returned to a more employer-friendly standard. But, the NLRB recently vacated its Hy-Brand decision based on a conflict regarding one of its Members. Now, the D.C. Circuit likely will weigh in on the appropriate scope of the joint employer standard. READ MORE
In July, we reported that the Supreme Court scheduled oral arguments to settle the circuit split of whether mandatory class action waivers violate section 7 of the National Labor Relations Act (“NLRA”).
Last month, both sides argued before the Court: the pro-employer representatives argued that arbitration agreements containing class waivers must be enforced under the FAA (representing the Second, Fifth and Eighth Circuits) while the pro-employee representatives argued that class waiver provisions contained in arbitration agreements are illegal under the NLRA and thus, not subject to the FAA (representing the Sixth, Seventh and Ninth Circuits). READ MORE
On Friday, June 16, 2017, the United States Department of Justice (DOJ) filed an amicus brief reflecting a change of heart when it comes to the enforceability of class waivers in arbitration agreements. In an unprecedented move, President Trump’s acting solicitor general, Jeffrey B. Wall, said his office had “reconsidered the issue and has reached the opposite conclusion” as the Obama administration in a set of consolidated cases currently before the U.S. Supreme Court, NLRB v. Murphy Oil USA Inc. (Docket Nos. 16-285, 16-300, and 16-307).