In May, the U.S. Supreme Court in AT&T v.
Concepcion issued a landmark decision favoring the arbitration
of claims which buoyed employers' hope for a similar finding in
the employment context. But a recent ruling of the National Labor
Relations Board at least reminds employers of the limits of
arbitration policies in the employment context.
In Supply Technologies, LLC v. Teamsters Local 120, NLRB,
Case No. 18-CA-19587 (May 31, 2011), the NLRB struck down an
employer's mandatory arbitration policy as an unfair labor
practice. In Supply Technologies, the employer implemented a
mandatory grievance-arbitration program for its employees, called
the "Total Solution Management" (TSM). The TSM program
consisted of three steps (internal review, mediation, and binding
arbitration) and, with limited exception, was the sole means for
resolving any claims against the employer. Employees who refused to
participate in the TSM program were terminated.
The Teamsters filed a complaint with the Board alleging that the
TSM program unlawfully interfered with employees' rights under
the National Labor Relations Act to file an unfair labor practice
charge with the Board or access the procedures available at the
Board. The Board agreed. Without addressing the Supreme Court's
decision in AT&T, the Board struck down the employer's
mandatory arbitration program by relying on inconsistencies in the
paperwork describing the program and the employees' ability to
understand the nature of the program.
In rolling out the program, the Company simply distributed several
documents about the program, in English, despite the fact that a
significant percentage of the workforce did not speak English.
Testimony suggested that the employer discharged employees who
claimed not to understand, who requested explanations or who failed
to cooperate. The Board in fact found the documents for the TSM to
be confusing and full of inconsistencies.
Most significantly, the TSM documents stated that the only claims
that employees could bring outside the TSM policy were criminal
claims, and claims for workers' compensation and unemployment
benefits. This language suggested an employee had to bring any
unfair labor practice charge through the TSM program, and thus
could not make that charge with the Board. Thus, the TSM program
materials appeared to require arbitration of any charges that could
have been filed with the NLRB.
In addition, the employer's TSM program stated that employees
waived any right to remedial relief recovered by any agency. Thus,
even if the TSM program did not prevent an employee from filing a
charge with the Board, the Board believed that the waiver
requirement would serve to deter and discourage employees from
exercising their rights to bring a charge with the Board or utilize
its processes. Since the NLRA prohibits such conduct, the Board
struck down the employer's mandatory arbitration policy.
The Supply Technology decision provides an illustrative
example of the limits of a mandatory arbitration policy in the
employment context and the critical role that drafting and roll-out
can play in implementing such a policy. Employers who may be
considering implementation of such a program should contact their
legal counsel to discuss not only how federal labor law may affect
a mandatory arbitration program, but other federal and state laws
that could impact a program of this type.
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.
