NLRB Serves Up An Epic Ruling For Employers

By Patrick Scully

In its first significant decision applying the Supreme Court’s holding in Epic Systems v. NLRB, 584 U.S. ____, 138 S.Ct. 1612 (2018), the National Labor Relations Board (“NLRB” or “Board”) ruled that a restaurant owner lawfully compelled its employees to sign a revised mandatory arbitration agreement. 

The employer, an operator of Latin-themed restaurants in the Houston area, required its employees to sign a revised arbitration agreement prohibiting them from opting into a class or collective wage and hour action.  The employer issued the revised agreement because several employees had opted into such a wage action and the employer’s prior arbitration agreement only prohibited employees from filing class or collective actions.

The Board noted, in light of Epic Systems, that it was simply not unlawful under the National Labor Relations Act (“Act”) for an employer to require its employees to waive their right to file or opt into class or collective wage and hour actions.  Accordingly, it was not unlawful for the restaurant owner to insist on its revised agreement as a condition of employment.  Although it was clear that the employer imposed the new agreement in response to employees participating in the wage and hour action, the NLRB reasoned that the employer did not retaliate, because the new agreement did not actually restrict any activity protected by Section 7 of the Act. 

Dissenting Board Member McFerran took issue primarily with this last point, noting that the NLRB has historically found that a facially valid work rule must be struck down if it is promulgated in response to “protected” (Section 7) activity.  Member McFerran disagreed with the majority that this precedent only applied to rules that imposed restrictions on union or other protected activity. By suggesting that the Board’s decision “departs from Board precedent without explanation”, the dissent provided a recipe for the restaurant owner’s employees to appeal the decision.

Cordua Restaurants, Inc. 368 NLRB No. 43 (August 14, 2019)