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NLRB Moves Quietly to Reverse Pro-Worker Arbitration Rule (2)

May 22, 2019, 10:16 AMUpdated: May 22, 2019, 10:29 PM

The National Labor Relations Board has been working to make it easier for employers to steer certain workplace claims into arbitration, a private dispute resolution forum that tends to favor businesses.

A decision by the NLRB that loosens the agency’s standards for deferring to arbitration would add to the significance of the U.S. Supreme Court’s 2018 decision in Epic Systems v. Lewis and related cases that have recently given businesses more power to require arbitration and prevent classwide actions.

Most employers already require their workers to go through arbitration to pursue any legal claims against their employers, rather than go to court or join together in class lawsuits or grievances.

A federal appeals court recently ruled that Tesla Inc. can require a worker to arbitrate his race bias claims; and Uber Technologies Inc. agreed in May to pay between $146 and $170 million to settle tens of thousands of individual drivers’ arbitration claims.

The Republican board members’ call for briefs in Robert Atkinson Jr.'s case against United Parcel Service Inc. wasn’t issued to the public and the NLRB didn’t release an announcement, a common practice when the agency contemplates significant policy changes. The standard currently in place was enacted in 2014 by a Democratic-majority NLRB in a case known as Babcock. That ruling overturned a legal test from 1984.

The now more conservative NLRB has rolled back a series of other policies enacted by the previous Democratic majority that are broadly considered to be pro-worker.

Changing arbitration deferral standards without inviting all stakeholders to weigh in “has a very negative effect” on the five-member NLRB, Mark Pearce, the board’s preceding Democrat chairman, said.

“The impact of these decisions are significant, and the board should therefore have the benefit of hearing the public on this major reversal of precedent,” Pearce said. “These kinds of issues should be put out there for amicus briefs.”

The NLRB responded to questions by referring Bloomberg Law to a previous opinion by a Republican chairman that lays out the NLRB’s legal authority to change labor policies via a ruling in a case—instead of through the formal agency rulemaking process—without public notice.

Babcock is an unfortunate decision and, in my view, is inconsistent with the purposes of the National Labor Relations Act,” Marshall Babson, management-side counsel at Seyfarth Shaw and former Republican board member, told Bloomberg Law. “The idea that the parties agree to arbitration but the board can come in after a decision is reached by an arbitrator and second-guess it as inconsistent with the statute is a total misunderstanding.”

Babson filed an amicus brief in the case on behalf of the Chamber of Commerce, the country’s largest business federation.

“While the board could’ve been perhaps wider in its invitation, I’m not aware that it’s precluded any others from participating—and indeed others have,” Babson said.

The Association for Union Democracy, a nonprofit that advocates for the labor movement, filed its own amicus brief, according to the NLRB’s website. Major unions like the AFL-CIO haven’t weighed in.

The AFL-CIO didn’t respond to a request for comments on the matter.

UPS Asks for Return to Pro-Business Standard

The lone Democrat on the five-member board, Lauren McFerran, dissented from the majority, noting that “no party to this case has asked the Board to overrule, modify, or even revisit Babcock.”

McFerran also suggested that the decision not to issue a public notice was made contrary to her input. In the earlier opinion the NLRB pointed to, McFerran said that Democratic-majority boards haven’t historically refused to request public input “over the objection of one or more Board members.” Pearce told Bloomberg Law that the NLRB’s GOP members also ignored similar protests he made during a brief period as a member of the minority under this current board.

The deferral issue usually comes up in employment disputes where a contract requirement overlaps with a possible violation of the National Labor Relations Act—like workers who were formally fired for repeated tardiness, but claim they were actually let go for participating in workplace organizing. The NLRA guarantees most private-sector workers certain rights to organize and join unions without interference from management.

Employers in those circumstances can ask the NLRB to hold or dismiss a worker’s unfair labor practice complaint under the NLRA in favor of the arbitration process or an arbitrator’s remedy.

The current test for answering those motions compels employers to demonstrate that the arbitration clause specifically considered both the alleged contract violation as well as statutory violations, and that the ultimate remedy isn’t contrary to federal labor statutes.

The standard Babcock overturned—which the board could soon return to—was more lenient about when to defer to arbitration, and puts the burden of proof on the party opposing such a motion.

UPS “respectfully urges the Board to vacate the inequitable and unworkable postarbitral deferral standard set forth in Babcock” and to “retroactively reinstate the historic” test, attorneys for the company said in their response to the board.

Complainant Allegedly Fired for Union Activity

Catherine Highet, Atkinson’s attorney, said her client’s case is “hardly a poster child for the board’s position.”

Atkinson was fired for failing to download a workplace application, although he alleges it was done in retaliation for organizing activity—an alleged violation of both his employment contract and federal labor law.

Atkinson was part of a campaign urging co-workers not to sign a new collective contract that his Teamsters union negotiated with UPS.

Members of the union leadership that helped bargain for the contract—including a person Atkinson ran against for a union office—were part of the grievance panel that heard the challenge of his firing, according to Highet. That panel issued a one-sentence document finding that no contract provisions were violated.

Atkinson then took his case to the NLRB. An administrative law judge applied the Babcock standard and held that UPS didn’t meet its burden “to demonstrate that the grievance panel considered the statutory issue of whether the Respondent violated the National Labor Relations Act by discharging” Atkinson.

On appeal to the full NLRB, the board decided to move to undo the Babcock precedent, rather than consider whether the judge applied the precedent correctly.

There are some exceptional and rare situations in which the board should overturn an arbitration award, Babson said, “but in the overwhelming majority of circumstances, the default should be to give full force and effect to the arbitrator’s remedy.”

Highet said her client’s case “perfectly illustrates why the Olin ruling—the old test—is a bad idea, and Babcock is a good one,” referring to the 1984 board decision In re Olin Corp.

“You’ve got a panel of this guy’s political enemies not explaining the basis for their holding, and Olin says that you should defer precisely because you don’t know what they did. Babcock says you need some indication that the arbitrator or panel actually considered the statutory issue.”

(Updated to include the full name and link to the Olin Corp. ruling.)

To contact the reporter on this story: Hassan A. Kanu in Washington at

To contact the editor responsible for this story: Terence Hyland at