NLRB Upholds Arbitration Agreement Confidentiality

In March, the National Labor Relations Board (NLRB) considered the lawfulness of arbitration agreements that require employees to maintain the confidentiality of arbitration proceedings. Since such proceedings may contain unflattering information, both employers and employees may favor keeping them private. But that could restrict an employee’s freedom to discuss workplace matters in violation of Section 7 of the National Labor Relations Act (NLRA).

The Board’s decision in Dish Network, LLC, 370 NLRB No. 97 (2921), concluded that confidentiality provisions in arbitration agreements do not violate Section 7 as far as requiring the proceedings, including discovery, hearings, and awards, to be kept private. They are, rather, shielded by the Federal Arbitration Act (FAA), which cannot be invalidated by the NLRA. However, mandating confidentiality regarding settlements is not covered by the FAA, since a settlement removes the dispute from arbitration. Thus, employees have the right to discuss settlement terms and conditions with fellow employees.

A dissent from recently appointed Chairman Lauren McFerran, however, indicates that this and other NLRB decisions may change in the future. While McFerran agreed with the conclusion that confidentiality cannot be required concerning settlements, she strongly disagreed with the Board’s decision regarding other provisions. The Chairman maintained that preventing employees from discussing other parts of the arbitration with anyone meant that the information must be kept even from a private attorney or the Board itself. McFerran believes that the FAA must yield to the NLRA with respect to confidentiality.

As Biden appointees to the NLRB eventually become the majority, the McFerran dissent likely will become law. Meanwhile, employers should review arbitration agreements with their employment attorney to ensure that the wording cannot be interpreted as preventing employees from discussing arbitration settlements. As always, we are happy to help.

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