The NLRB is Going All Out to Defend Collective Legal Action for Workers

In a typical month, if the NLRB decides twenty cases, each case will address a different issue.  So, it is notable that over the last two months, the NLRB has decided twenty-seven separate cases addressing the same issue – employment policies that prohibit workers from bringing collective legal actions.  These decisions highlight the extent to which employers in every sector of the economy are requiring employees to sign mandatory arbitration agreements as a condition of employment.  The employers in these cases range from Convergys, a multinational company that operates call centers, with 125,000 employees world-wide, to an independent car dealership.

The widespread use of mandatory arbitration provisions serves as a reminder that the power imbalance between workers and employers has changed little over the last 80 years.  In 1937, in rejecting a claim that the National Labor Relations Act was unconstitutional, the Supreme Court explained that “a single employee [is] helpless in dealing with an employer, that he [is] dependent ordinarily on his daily wage for the maintenance of himself and family; that if the employer refused to pay him the wages that he thought fair, he was nevertheless unable to leave the employ and resist arbitrary and unfair treatment.”  Today, it is still true that an individual who has just accepted a job is in no position to negotiate the terms of the mandatory arbitration agreement that is presented to her on her first day of work.

Even before Congress enacted the National Labor Relations Act, it addressed the problem of employers using their economic power to coerce workers into agreements not to engage in collective action.  In 1932, Congress passed the Norris-LaGuardia Act, making a finding that “the individual unorganized worker is commonly helpless to exercise actual liberty of contract and to protect his freedom of labor, and thereby to obtain acceptable terms and conditions of employment.”  The Norris-LaGuardia Act addressed this problem by making any contract that limits an employee’s freedom of association unenforceable.  A group of prominent labor law scholars recently filed a brief in the Ninth Circuit arguing that the Norris-LaGuardia Act makes unenforceable any agreement purporting to limit the rights of employees to engage in collective legal action.

In 2012, the NLRB decided D.R. Horton, Inc., 357 NLRB No. 184 (2012), holding that an employer violates the NLRA when it requires employees to sign an agreement precluding them from engaging in collective legal action.  A divided Fifth Circuit denied enforcement, with the majority ruling that the Federal Arbitration Act trumps the NLRA.  In Murphy Oil, 361 NLRB No. 72 (2014), the Board explained why it would not acquiesce to the Fifth Circuit’s decision in D.R. Horton.  The Board viewed the Fifth Circuit’s decision as based on a misunderstanding of the right at stake.  The Fifth Circuit stated that there is no substantive right to proceed collectively in court.  In fact, according to the Board, the “right to engage in collective action – including collective legal action – is the core substantive right protected by the NLRA.”  The Board went on to explain that even though employment law statutes such as the Age Discrimination in Employment Act and the Fair Labor Standards Act do not create a substantive right to pursue claims collectively, the NLRA can and does create an independent right to collectively pursue claims under those statutes.  Unfortunately, the NLRA authorizes forum shopping by parties that wish to challenge Board decisions.  Thus, even though the Murphy Oil case arose in Alabama, the company was able to bring its petition for review in the Fifth Circuit, where the court once again denied enforcement, finding no need to engage in any further analysis.

The Fifth Circuit issued its decision in Murphy Oil on October 26, 2015.  The twenty-seven decisions the Board has issued since then on this issue can be viewed as an attempt to escape from the Fifth Circuit.  An employer may only file a petition for review in a circuit in which it “transacts business.”  This means that at least some of the twenty-seven employers involved in the recent cases will be precluded from filing petitions for review in the Fifth Circuit.  If the Board can convince another Circuit that nothing in the Federal Arbitration Act overrides the NLRA right to engage in collective legal action, then the issue will most likely go to the Supreme Court.  In light of the Court’s recent track record, it’s fair to say that the Board faces an uphill battle.  But, at a minimum, the Board’s decisions call attention to the fact that if workers are not able to bargain collectively, employers still routinely impose one-sided terms upon them.