Employee Manual Update – Beware of Overly Broad Polices: Employers Arbitration policy found to violate section 7 of the Act.

Mastec Services, 16-CA-86102

How many of us have Employee Manuals that have a clause similar to this contained within:  “This Policy applies to any dispute arising out of or related to Employee's employment with the Company or termination of employment. Except as it otherwise provides, this Policy requires all such disputes that have not otherwise been resolved to be resolved only by an arbitrator through final and binding arbitration and not by way of court or jury trial. Such disputes include, without limitation, disputes arising out of or relating to interpretation or application of this Policy…..

I understand that my employment with “Employer” is at-will…..,

I further acknowledge that the Handbook contains a Dispute Resolution Policy… (With Opt-Out Policy)

It’s time to take a good look at our organization’s Employee Manuals and make the necessary revisions to assure their compliance with our current statures.

In Mastec Services Company (Employer), Inc., 16-CA-86102 (June 3, 2013), the employer’s Dispute Resolution Policy along with its accompanying Employee Acknowledgment were found to violate Section 8(a)(1) of the Act.

The Employer was found to have maintained and enforced an employee handbook establishing terms and conditions of employment requiring employees to resolve all employment related disputes by individual arbitration and forego any rights that they had to resolution of employment-related disputes by collective or class action. Additionally, the Complaint also alleged that the Employer required employees to sign an employee handbook acknowledgement form providing that employees would be bound to the Arbitration Policy described above, unless they opt out of the policy within 30 days of receiving the employee handbook.

The Dispute Resolution Policy specifically prohibited class or collective actions and actions on behalf of a class of persons or the general public, and prohibited the parties and the arbitrator from disclosing the existence, content or results of the arbitration without the prior consent of all parties to the arbitration. The policy and the Acknowledgement indicated that employees must choose whether to accept or opt-out of the policy, but in order to opt out, they had to do so, in writing, within 30 days of receipt of the handbook setting forth the policy.

The employer argued, this was not a mandatory prohibition as the Employee “had the right to opt out of the Policy within thirty days of his receipt of the Employee Handbook and, thereby, could have maintained the right to pursue claims in court- whether as an individual litigant or as a participant in a class or collective action [emphasis supplied] –if he so chose.”

The Judge ruled that the Dispute Resolution Policy, even with the opt out provision, violated Section 8(a)(1) of the Act. 

The Board has long held that concerted legal action addressing wages, hours and

working conditions, whether in a courtroom setting, before an administrative agency, or through arbitration, represents protected concerted activities under Section 7 of the Act.

The Act grants to employees the right to engage in protected concerted activities without interference by his/her employer. As these rights are granted by the Act, an employer may not lawfully require its employees to affirmatively act (opt out, in writing, within thirty days of receipt of the Employee Handbook) in order to obtain or maintain these rights.

Additionally, employees who did opt out were unable to cooperate and engage in concerted activities with those employees who did not opt out; they cannot engage in class actions with them and, pursuant to the terms of the Policy, they cannot learn of the existence, content or results of prior arbitrations that the non-opt out employees were involved in. This would clearly put them at a disadvantage in their attempts to engage in concerted actions.

Finally, the Judge found that some employees might be reluctant to exercise the opt out option for fear of angering their employer. Opting out required the employee to obtain a Dispute Resolution Policy Opt Out form from the Employer’s Legal Department, and signing and returning it to the Legal Department within thirty days of receipt of the policy.

Counsel for the Employer argued that the opt-out procedure provides that the employee obtain the opt-out forms from the Employer’s legal department and return it to the same department, rather than his/her supervisor or manager; therefore, the supervisors and managers would not know which employees elected to opt-out. Further, the next to final paragraph of the Policy states that employees choosing to exercise their right to opt-out will not be subject to any adverse employment action for doing so.

Ultimately, the Judge ruled that the Respondent’s Dispute Resolution Policy violated Section 8(a)(1) of the Act.

The takeaway for employers:

As we have learned in several recent NLRB cases, overly broad policies that appear to restrict an employee’s right to engage in concreted activities should be avoided.

Opt out and Saving Clauses simply are not an acceptable Employer argument in the et s of the NLRB.

Make the necessary revisions to your Employee Manuals to avoid these potential pitfalls in the future.

The Case information can be found on the NLRB’s website here…

The Administrative Law Judge’s Decision can be found on the NLRB’s website here…

These views and opinions are personal and based upon the facts and information as it has been presented to me.  I am not an attorney and do not represent myself as one.  I always recommend that employers and employees seek appropriate legal counsel with matters such as these to further limit the potential liability to you and your organization.