More Reason To Be Careful With Mandatory Arbitration Clauses

This month, the United States Court of Appeals for the DC Circuit is scheduled to hear argument on an appeal from a decision of the NLRB, which held that a mandatory arbitration clause could not be applied to claims raised by non-union employees pursuant to the National Labor Relations Act.

In the case of U-Haul Company of California and Machinist District Lodge 190, Local Lodge 1173, International Association of Machinists and Aerospace Workers, AFL–CIO (html pdf), a divided panel of the NLRB held that a mandatory arbitration clause, which required that employment related claims must be submitted to arbitration rather than to court, could not be applied to prevent employees from filing unfair labor prctice charges with the NLRB.

The Employer, U-Haul, was in the middle of a union organizing campaign when it implemented the mandatory arbitration clause.  However, U-Haul did not apply the policy to any person who alleged an unfair labor practice, and the policy did not refer explicitly to the National Labor Relations Act.  Still, the IAMAW brought the claim, alleging that the policy had an adverse impact on employee’s rights under the Act.

No decision has been made yet by the Court of Appeals.  Either way, though, this case demonstrates the important of wise drafting of mandatory arbitration clauses (sinceit may be problemmatic not to address the effect of the policy on the NLRA), and it demonstrates the importantance of seeking and following counsel’s advice regarding the implementation of any policy during a union organizing campaign.

If you have any questions about either topic, you may feel free to contact me as always.

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