THE NEW COMPANY UNIONS: MANDATORY INDIVIDUAL EMPLOYMENT ARBITRATION AGREEMENTS AND SECTION 8(a) (2) OF THE NATIONAL LABOR RELATIONS ACT

By Froehlich, Jennifer J. | Labor Law Journal, Fall 2007 | Go to article overview

THE NEW COMPANY UNIONS: MANDATORY INDIVIDUAL EMPLOYMENT ARBITRATION AGREEMENTS AND SECTION 8(a) (2) OF THE NATIONAL LABOR RELATIONS ACT


Froehlich, Jennifer J., Labor Law Journal


Individual employer-imposed employee arbitrati on agreements have been extensively analyzed since the U.S. Supreme Court validated them in Gilmer v. Interstate/Johnson Lane Corp. in 1991.1 Gilmer officially endorsed an employer's ability to condition a worker's employment on the employee's agreement to arbitrate federal statutory disputes.2 Ten years later, the Court held in Circuit City Stores, Inc. v. Adams, that the Federal Arbitration Act applied to these agreements.3

These individual employment arbitration agreements are typically drafted by employers to ensure that certain employee grievances or issues go to arbitration instead of the court system. The employer formulates the agreement to arbitrate, decides its terms, and then the employee has the choice to sign the agreement or forfeit the job offer, or even the current job. When an employee does have a grievance that falls under the scope of the agreement, the employee must abide by the arbitration agreement and its terms in order to seek resolution. By signing the agreement, the employee forgoes the right to lay a claim in court.

Since Gilmer, these employer-imposed agreements have become very common in non-unionized work environments.4 There are many reasons to explain this increase.

On the employer side, employers perceive it to be in their interest to draft and impose these agreements on their employees to maintain control over employment-related complaints and to limit their employees' contact with the court system and federal laws governing the disputes.5 There are many reasons why the individual employment arbitration agreements benefit employers.6 The agreements are solely drafted by employers with no employee input, i.e., the terms of the arbitration are completely and solely dictated by the employer. The terms are also unilaterally imposed on employees as a quid pro quo for employment. Employees do not get, or in some cases, keep their jobs without signing these agreements. Finally, the agreements force employees to waive their rights to litigate statutory employment claims in court in favor of the employer-created arbitration process. Simply put, the employer can control the choice of venue when an employee has a statutory claim, and the employer can decide the terms of the actual arbitration process, i.e., how the dispute will be heard and decided.

The reasons why employees should be wary of these agreements are precisely why employers like them.7 For one, they provide the employer with complete control over employment-related disputes covered by the arbitration agreement. This forces the employee to arbitrate employment issues when he or she might prefer taking the issue to court. Because the terms are unilaterally imposed on employees, they have no input into the process itself. Employees might not understand what they are getting themselves into-the arbitration agreement can provide the employee with the illusion of employer-provided protection in the case of an employment dispute.

The process itself may be so costly that the employee may not be able to bring the case to arbitration, thereby effectively forgoing a hearing on the case at all.8 Since remedies in arbitration agreements are usually limited by employers, an employee will likely find it hard to obtain representation in an arbitration setting because the potential for remuneration is limited by the arbitration agreement's limitation of remedies. This puts the employee at an even greater disadvantage.

COMPANY UNIONS AND THE NLRA

Most of the discussion about individual arbitration agreements and their relationship to the National Labor Relations Act (NLRA) has centered on employees' Section 7(9) rights.10 However, a different, related question has been essentially ignored. Do these individual arbitration agreements force employees into quasi-"company unions," i.e., is this employer domination of a "labor organization" in violation of Section 8(a)(2) of the NLRA?

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THE NEW COMPANY UNIONS: MANDATORY INDIVIDUAL EMPLOYMENT ARBITRATION AGREEMENTS AND SECTION 8(a) (2) OF THE NATIONAL LABOR RELATIONS ACT
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