In Murphy Oil USA, Inc. v. National Labor Relations Board, a three-judge panel of the United States Court of Appeals for the Fifth Circuit again held, contrary to the NLRB, that an employer does not commit an unfair labor practice by requiring its employees to sign arbitration agreements.  In doing so, the Fifth Circuit followed its earlier decision in D.R. Horton, which rejected a similar ruling from the NLRB.

In the underlying Board decision, the NLRB disregarded the Fifth Circuit’s D.R. Horton decision and held that the employer violated § 8(a)(1) of the National Labor Relations Act by enforcing agreements that required employees to resolve all employment-related claims through arbitration.  As in D.R. Horton, the Fifth Circuit again reversed, finding that an employer commits no unfair labor practice by requiring employees to relinquish their right to pursue class or collective claims in all forums by signing arbitration agreements.  However, the Fifth Circuit denied the employer’s request to hold the Board in contempt for disregarding its precedent, stating that the Board may not have known that Fifth Circuit law would control on petition for review.  The Fifth Circuit stated, “We do not celebrate the Board’s failure to follow our D.R. Horton reasoning, but neither do we condemn its nonacquiescence.”

The Board had also found that the employer’s arbitration agreement and revised arbitration agreement violated § 8(a)(1) of the NLRA because employees could reasonably believe the agreements precluded the filing of Board charges. The Fifth Circuit partially enforced this ruling.

The original arbitration agreement provided that “any and all disputes or claims [employees] may have . . . which relate in any manner . . . to . . . employment” must be resolved by individual arbitration and that employees “waive their right to . . . be a party to any group, class or collective action claim in . . . any other forum.” The Fifth Circuit enforced the Board’s ruling that this broad language created the reasonable impression that an employee waived administrative rights.

The employer issued the revised arbitration agreement after the Board’s decision in D.R. Horton, adding the following clause:  “nothing in this Agreement precludes [employees] . . . from participating in proceedings to adjudicate unfair labor practice[] charges before the [Board].”  The Board found that this modification did nothing to correct the unlawfulness of the agreement because it left the entirety of the original agreement intact.  The Fifth Circuit reversed, holding that, reading the revised arbitration agreement as a whole, “it would be unreasonable for an employee to construe the Revised Arbitration Agreement as prohibiting the filing of Board charges when the agreement says the opposite.”

The Fifth Circuit also rejected the Board’s finding that the employer violated § 8(a)(1) of the NLRA by filing a motion to dismiss and compel arbitration in response to claims filed by its employees in Alabama federal court. The Fifth Circuit found that the employer’s motions had a reasonable basis in fact or law and issued the following warning to the NLRB:

Though the Board might not need to acquiesce in our decisions, it is a bit bold for it to hold that an employer who followed the reasoning of our D.R. Horton decision had no basis in fact or law or an “illegal objective” in doing so.  The Board might want to strike a more respectful balance between its views and those of circuit courts reviewing its orders.