7.10.2013

Class Action Waiver with Opt-Out Provision Found Lawful Under the NLRA


On June 25, 2013, a National Labor Relations Board administrative law judge (“ALJ”) held that Bloomingdale’s, Inc.’s arbitration program did not violate the National Labor Relations Act (“NLRA”) because the Company’s 30-day opt-out period was sufficient to render the program voluntary.

The case (Bloomingdale’s Inc., NLRB ALJ, No. 31-CA-71281, 6/25/2013) arose from a wage and hour dispute between Bloomingdale’s and a former sales associate. Several months after she was terminated, the sales associate filed a class action suit against the Company in California state court seeking to recover unpaid overtime and other wages. Bloomingdale’s removed the case to federal court and moved to compel arbitration, arguing that the employee had waived her right to pursue class actions by failing to opt-out of the Company’s early dispute resolution program. The federal district court granted the Company’s motion and dismissed the class action lawsuit. In response to the Company’s motion to compel arbitration, the associate filed an unfair labor practice charge with the National Labor Relations Board (“NLRB” or “Board”), alleging that the Company was unlawfully interfering with the right of employees to engage in protected concerted activities by invoking the class action ban. 

Bloomingdale’s mandatory arbitration program, called Solutions InStore, required final and binding individual arbitration for employment-related disputes with certain exceptions, including claims under the NLRA.  New hires such as the sales associate in this case were given notice and opportunity to opt-out of this program by signing and returning an election form within 30-days of hire.  The sales associate failed to opt-out of this program within the requisite period and thus was subject to the mandatory arbitration provision and class action ban. 

In finding the program lawful, the ALJ concluded that the 30-day opt-out period was “not insubstantial or [an] unjustifiable period of time.”  The ALJ further held that a one-time requirement that employees sign and mail a preprinted election form to opt-out of this program was at best a minimal administrative burden and not unlawful under the NLRA.  Additionally, the ALJ noted that federal law favors the arbitration of disputes. 

Other NLRB administrative law judges have recently invalidated similar arbitration and opt-out provisions, although those cases centered on the fact that the policies contained confidentiality provisions that forbade employees from disclosing to other employees the existence, content or results of arbitration. Such administrative law judge decisions, including the recent decision in Bloomingdale’s, lack precedential authority until reviewed and affirmed by the Board. Several cases related to such provisions now await Board action.  


Contact: Emily Wilcheck
419.254.5260
ewilcheck@ralaw.com

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