As previously detailed here, the U.S. Supreme Court’s 2018 Epic Systems decision established that requiring employees to waive their right to pursue collective or class actions does not violate the National Labor Relations Act’s “catchall” protection—the right to engage in “concerted activity”—and courts must enforce arbitration agreements as written.

The Supreme Court not only confirmed the legality of class action waivers under the Federal Arbitration Act, but it also narrowly construed the NLRA’s catchall provision as focused on the right to organize unions and bargain collectively in the workplace.

The Court’s holding that the right to engage in such “concerted activities” does not guarantee collective or class action procedures underpins a recent NLRB decision concerning issues of first impression: imposing and requiring as a condition for continued employment a new class action waiver rule in response to collective action.

In Cordúa Restaurants, Inc., 368 NLRB No. 43 (Aug. 14, 2019), the employer maintained an arbitration agreement that required employees to waive their rights to “file, participate or proceed in class or collection actions . . . in any civil court or arbitration proceeding.” The provision was silent on an employee’s right to “opt in” to such an action. After seven employees filed a collective action alleging violations of wage and hour laws, the employer distributed a revised agreement that also required employees to agree “not to opt in to collective actions.” The employer distributed the new agreement, and a manager explained that employees who refused to sign would be removed from the schedule.

Applying Epic Systems broadly, the Board held that neither creating the revised class action provision in response to collective action nor threatening to discharge employees for refusing to sign it violated the NLRA. Under Epic Systems, the procedural means for resolving employment-related claims falls outside the NLRA’s protections, so the employer’s revised agreement in response to collective action did not violate the NLRA. Further, the Board interpreted Epic Systems as permitting an employer to identify the “lawful consequences”—i.e., discharge—of failing to sign a mandatory arbitration agreement. The Board, however, reaffirmed longstanding precedent that an employer cannot discipline or discharge employees for engaging in “concerted” legal activity.

Key Takeaways:

  • Employers can impose new or revised mandatory arbitration agreements following collective or class actions and seek enforcement in pending litigation.
  • Employers can condition employment on employees entering into an arbitration agreement with a collective or class action waiver.
  • Employers cannot discharge employees for engaging in protected concerted activity, which the Board says includes coworker discussions about wages and filing a collective or class action.