Earlier this week, a National Labor Relations Board Administrative Law Judge held that Ross Stores Inc. violated the National Labor Relations Act by maintaining an unlawful arbitration agreement. In pertinent part, Judge Pollack ruled that Ross ran afoul of the Act by forcing employees to sign an arbitration agreement that prohibited employees from pursuing either class or collective actions against the retailer.
The decision should come as no surprise to labor watchers, as just last week two different ALJs struck down unlawful arbitration agreements prohibiting collective and class actions. In this case, Judge Pollack reasoned that Ross’ agreement was unlawful in light of the Board’s controversial D.R. Horton decision from 2012.
“It is undisputed that the arbitration policy prohibits class actions in both judicial and arbitral forums,” Judge Pollack said. “Respondent required employees to agree to the arbitration policy as a condition of employment. Accordingly, I find that respondent’s maintenance of the arbitration policy violates [the NLRA] as set forth in D.R. Horton.”
While the Board still considers D.R. Horton to be good law, the Fifth Circuit does not. But the Board chose not to appeal the Fifth Circuit’s decision overruling the Board’s determination that class waivers violate the Act, so the Supreme Court will not have the opportunity to weigh in for now.
In the meantime, employers would be wise to carefully review their employee handbooks, as well as any dispute resolution agreements between themselves and their employees, to ensure that those policies comply with the National Labor Relations Act. Based on the fact that we have seen three arbitration agreements struck down in the past week, it can be surmised that an arguably unlawful policy will bring with it the specter of an unfair labor practice charge.