United States: Board Upholds Enforcement Of Pre-Hire Arbitration Agreement

The alternative dispute resolution landscape continues to evolve for employers with unionized workforces. Anheuser-Busch, LLC, 367 NLRB 123 (May 22, 2019), is the National Labor Relations Board's (NLRB) latest decision on the applicability of employment-related, mandatory arbitration agreements in a union context, after last year's Supreme Court decision in Epic Systems Corp. v. Lewis.

In Anheuser-Busch, a divided three-member panel held that an employer can lawfully seek to enforce a pre-employment arbitration agreement against a former union employee, even though it had not provided the union with notice or an opportunity to bargain over the terms of the arbitration agreement.


For over 15 years, Anheuser-Busch had asked all applicants for employment, including bargaining unit members, to agree to its Dispute Resolution Program (DRP), which was different from the grievance procedure in the collective bargaining agreement between Anheuser-Busch and the union representing its employees. While the DRP excluded claims by employees against the company that were covered under the collective bargaining agreement, the company never provided the union with notice or opportunity to bargain over whether the DRP could apply to bargaining unit members.

The employee in question was a bargaining unit member covered by the collective bargaining agreement between the company and the union. In 2010, the company terminated the employee. Pursuant to the terms of the collective bargaining agreement, the union filed a grievance challenging the company's termination decision. The employee's termination was upheld through the grievance process, and the union grievance was dismissed without undergoing arbitration under the labor agreement.

Following the dismissal of his union grievance, the employee filed a lawsuit against the company, alleging race discrimination and retaliation. The company then moved to enforce the DRP agreement, which the employee had signed when he applied to work for the company. The employee filed a charge with the NLRB alleging that the company violated Sections 8(a)(1) and (5) of the National Labor Relations Act (NLRA) when it moved to enforce a pre-employment arbitration agreement that the company had unilaterally implemented without the union's consent.

The company argued that it had not violated Section 8(a)(5) of the NLRA when it moved to compel arbitration, because at the time in which the employee signed the arbitration agreement, the employee in question was not a member of the bargaining unit. In other words, the company argued that it had no obligation to bargain with the union over the terms that would apply to individuals before they are hired (and become members of the bargaining unit) or after they are terminated and the labor agreement's grievance process has been exhausted.

The administrative law judge (ALJ) dismissed this argument, holding that the company had violated the NLRA by seeking to enforce a unilateral change through its motion to compel arbitration. The NLRB overruled the ALJ's decision, however, holding that the company's motion to compel arbitration was a protected exercise of its First Amendment right to petition, and not a violation of Section 8(a)(5) of the NLRA. The Board concluded that employers can lawfully seek to enforce pre-hire arbitration agreements with persons who eventually became union-represented employees. Notably, the NLRB also accepted the company's argument that a former employee whose discharge was upheld by the grievance process is no longer a statutory employee in the bargaining unit.

Practical Implications

This decision provides employers with support for unilaterally requiring pre-hire applicants for bargaining unit positions to sign an ADR agreement before they begin work. It also supports an employer's ability to later compel arbitration of any claim covered by that ADR agreement brought by the same individual, at least after the individual is no longer employed with the company.  Although the right to move to compel arbitration of a current union-represented employee's claims may also be a protected First Amendment right, it is unclear from the opinion if it extends to current employees or only applicants and former employees—who are not statutory bargaining unit employees.  Unions often take the position that a grievance filed under a labor agreement by a union-represented employee is actually owned by the union.  Given that potential problem, employers may have a more difficult time enforcing an individual arbitration agreement filed by a present union-represented employee.  Perhaps that is not unduly concerning, however, given that union grievances usually are subject to arbitration anyway.  

While under Anheuser-Busch companies arguably do not have an obligation to bargain with the union over the implementation of these agreements in the pre-employment process, the future of unilaterally implemented pre-employment arbitration agreements in a unionized context is not guaranteed. This decision may be appealed to the court of appeals.  Moreover, the Anheuser-Busch decision was issued by a pro-arbitration, Republican-majority NLRB, the composition of which could change based on the outcome of the 2020 presidential election. For the time being, businesses should take a fresh look at how their arbitration agreements are structured and implemented to ensure that they are effectively covering claims not otherwise covered by a collective bargaining agreement. Additionally, any arbitration agreement rolled out at pre-employment to employees who will be subject to a collective bargaining agreement should probably exclude claims that are subject to a collective bargaining agreement.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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