The NLRB's Interference with Arbitration Agreements Continues

On January 14, 2013, in the case of Leslie's Poolmart, Inc. and Keith Cunningham, Case No. 21-CA-102332, Lisa D. Thompson, an administrative law judge for the NLRB, determined that the company's arbitration agreement, which did not contain a class action waiver, nevertheless violated the NLRA by interfering with Mr. Cunningham's right to engage in concerted activity. 


The judge's decision was based on the notorious D.R. Horton decision.  That case determined that arbitration provisions that include class action waivers violate the NLRA.  The theory is that if employees are prevented from joining together to prosecute a lawsuit, then their right to engage in concerted activities is violated. 


In the Poolmart case, the judge concluded that the arbitration agreement without the class action waiver still interfered with the employees' rights to engage in concerted activities.  In this case, Mr. Cunningham contended that the company incorrectly calculated overtime for him and other similarly situated employees.  the employer removed the case to federal court where it filed a motion to compel arbitration.  The employer sought an order compelling Mr. Cunningham's individual claims and dismissing Mr. Cunningham's seeking dismissal of his class/collective action claims.  At this point, Mr. Cunningham filed an unfair labor practice complaint with the Board.  The federal district court granted the company's motion, dismissing the classwide claims and compelling Mr. Cunningham to arbitrate his individual claim. 


Judge Thompson concluded that the "arbitration agreement violate[d] the Act" as demonstrated by the company's action to prevent Mr. Cunningham from pursuing his classwide claims.  She prohibited the company from "maintaining and enforcing a mandatory and binding arbitration policy that, either expressly or impliedly, or by Respondent's actions or practice, waives the right to maintain class or collective actions in all forums." 


Employers will need to examine their arbitration agreements to determine whether they can withstand the scrutiny as set forth in the Poolmart case.