Organizations that require employees to sign arbitration agreements as a condition of employment should have these documents periodically reviewed by legal counsel.  It is not uncommon for employees to challenge the enforceability of such documents, and a court or administrative law judge may agree with the challenge.  In a recent National Labor Relations Board decision, Uber Technologies Inc., Case 20-CA-181146 (June 13, 2017), the ride services smartphone application Uber was forced to explain how the "Dispute Resolution Agreement" it required software engineers to sign was not improper under the National Labor Relations Act (NLRA).

 

The "Dispute Resolution Agreement" contained language establishing that all disputes arising out of an individual's employment relationship with Uber are governed by binding arbitration.  The agreement also carved out an exception for claims "brought before and remedies awarded by an administrative agency if applicable law permits access to such an agency notwithstanding the existence of an agreement to arbitrate," including claims brought before the NLRB.

 

After receiving a charge from an employee who opposed this provision, the National Labor Relations Board (NLRB) issued a complaint alleging that Uber's decision to maintain this "Dispute Resolution Agreement" violated Section 8(a)(1) of the National Labor Relations Act (NLRA).  This statutory provision prohibits employers from maintaining work rules that reasonably tend to chill employees in their exercise of rights under Section 7 of the NLRA.  Where an arbitration agreement contains overbroad language requiring employees to bring all employment-related disputes to arbitration, legal authority establishes that such provision violates Section 8(a)(1) because it could reasonably be construed as precluding employees from filing charges with the NLRB.

 

While the "Dispute Resolution Agreement" in this case contained language that carved out claims brought before the NLRB from its scope, such language was found to be vague and ambiguous.  According to the presiding Administrative Law Judge, the savings clause "if applicable law permits access to such an agency notwithstanding the existence of an agreement to arbitrate" is vague and ambiguous if viewed from the perspective of a reasonable employee.

 

To support his conclusion, the Administrative Law Judge cites a case explaining that "[r]ank-and-file employees do not generally carry lawbooks to work or apply legal analysis to company rules as do lawyers, and cannot be expected to have the expertise to examine company rules from a legal standpoint."  Such language is an important reminder that any agreements employees are required to sign should clearly spell out the terms to which they are expected to adhere.  Because Uber's "Dispute Resolution Agreement" failed to do so, the company was ordered to rescind or revise its agreement and inform software engineers of these actions.