As employers, most are well aware of the benefits of resolving disputes with employees through binding arbitration, as opposed to a court proceeding. Especially if you have to undergo the ordeal of a jury trial. But make sure your arbitration agreements are up-to-date.
Based upon some recent court decisions, you have to make sure you have certain exclusions in the agreement. In other words, disputes that cannot be determined by binding arbitration.
Traditionally, the exclusions consisted of workers compensation and unemployment insurance claims. But what about claims through the National Labor Relations Board?
The Board on June 18, 2019 handed down the decision of Prime Healthcare Paradise Valley, LLC and Richard Cardona and Stephene Ortega Cases 21–CA–
133781 and 21–CA–133783 (https://www.nlrb.gov/cases-decisions/decisions/board-decisions). In that case, all employees were required to sign a binding arbitration agreement as a condition of employment. The agreement did not mention either way disputes with the NLRB. On the other hand, it did not indicate that those disputes had to be arbitrated. Instead, it had broad language that arbitration applied to: “All claims or controversies for which a federal or state court would be authorized to grant relief”.
The court invalidated the provision because it did not explicitly exclude NLRB claims. Moreover, the general language applied to all claims; inferentially it meant that such claims would have to be arbitrated.
For this reason, it is recommended you have explicit language in this regard. An example would be:
Arbitration does not cover, and you have the right to pursue independently of arbitration: workers’ compensation claims, unemployment insurance claims or
any claims that could be made to or under the National Labor Relations Board.
On a related point, you should also make it clear that there is no prohibition of bringing in action through the EEOC. However, after its conclusion or the issuance of a “right to sue” letter, further proceedings would have to be through arbitration and not a court trial. The language you might want to use is as follows:
You are not prohibited from pursuing an administrative claim with a local, state or federal administrative body or government agency that is authorized to
enforce or administer laws relating to employment, including but not limited to the Federal Equal Employment Opportunity Commission or similar state
administrative agency. However, after exhausting such an administrative claim, if you wish to proceed further, it must be done by arbitration.
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