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The Trend to Adopt Mandatory Employment Arbitration Programs

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In recent years, many private sector employers have adopted mandatory arbitration programs for employment disputes, which their employees are required to sign as a condition of employment. Main objectives of those programs are the expeditious resolution of employment disputes and the avoidance of protracted and expensive court litigation.

Typically, mandatory employment arbitration programs list the types of claims that are subject to mandatory arbitration, such as harassment, discrimination, and retaliation. They also list those claims that are unaffected by the arbitration agreement, such as workers’ compensation and the application of benefits.

Recently, the trend to adopt mandatory arbitration programs received new impetus by the United States Supreme Court decision that programs that require employees to waive their right to bring class and collective actions for employment disputes do not violate the National Labor Relations Act (the Act). [1]

The National Labor Relations Board (NLRB or Board) has held that arbitration agreements that prohibit the filing of claims with administrative agencies are unlawful. Under Board law, arbitration agreements that prohibit employees’ access to administrative agencies, including the Board, clearly  interfere with employees rights under the Act. [2]

However, the Board has held that, if the mandatory arbitration agreement includes a “savings clause” that specifically and prominently informs the employees that nothing in the agreement prohibits them from filing charges or participating in proceedings by administrative agencies, including the NLRB, such agreements cannot be reasonably interpreted to interfere with the employees’ right to access the administrative agencies and their processes. [3]

Employers may find it advantageous to review their mandatory employment arbitration agreements to make sure that appropriate savings clauses are included.

[1] Epic Systems Corp. v. Lewis, 584 U.S. _, 138 S.Ct. 1612 (2018).

[2] Prime Healthcare Paradise Valley, LLC 368 NLRB No.10 (2019).

[3] Wendy’s Restaurant 368 NLRB No. 72 (Sept. 11, 2019).