Ahead of President-Elect Biden’s inauguration in January, employers have a preview of what is likely to come in the form of stronger union and employee rights. On February 6, 2020, the House of Representatives passed the Protecting the Right to Organize Act of 2019 (commonly known as the “PRO Act”), which contains ambitious changes to the current labor landscape. Changes include expanding the scope of joint employer under the National Labor Relations Act (NLRA), narrowing the definition of “supervisor” under the NLRA, expanding the right to strike to include secondary boycotts among other strikes, and providing additional avenues for workers to participate in collective or class actions. While the Senate has not acted on the bill since it was passed by the House, employers would do well to keep an eye on the revival of the PRO Act or any similar legislation. As an update to our recent blogpost on the PRO Act (here), we highlight two changes below that threaten employers if the PRO Act becomes law.
Banning Class Action Waiver in Arbitration Agreements
The PRO Act amends the NLRA to prohibit any employer attempt to execute or enforce any agreement whereby an employee promises not to pursue any class or collective actions. Notably, this provision in effect would overrule the Supreme Court’s decision in Epic Systems Corporation v. Lewis, 138 S. Ct. 1612 (2018). The Epic Systems Court held that an arbitration agreement waiving the right to proceed collectively under the Fair Labor Standards Act (FLSA) is enforceable, subject to generally applicable contract defenses, such as fraud, unconscionability, or duress. Moreover, the Court held that a class action waiver in an arbitration agreement did not violate employees’ rights under the NLRA. In contrast, the PRO Act’s amendments to the NLRA specifically provide that notwithstanding the Federal Arbitration Act (the federal statute authorizing arbitration agreements), an employer’s attempt to enforce class action waivers in an arbitration agreement would be an unfair labor practice under the NLRA.
A NEW Federal Right of Action for Discharge or Discipline
The PRO Act also creates an entirely new claim for employees who are terminated or disciplined for joining or assisting a labor union or engaging in any other protected concerted activity, or whose employer terminated them to discourage them or other employees from joining or supporting a labor union. Under the PRO Act, terminated employees can file a civil action in federal court for violations of Sections 8(a)(1) or 8(a)(3) of the NLRA, after a waiting period of 60 days following the filing of a charge with the National Labor Relations Board (NLRB) making the same allegation. Borrowing the statute of limitation from Title VII, employees must file their PRO Act lawsuit within 90 days of the earlier of: (1) the expiration of the 60-day waiting period or (2) the date the NLRB notifies that individual that it will not issue a complaint.
Nonunion employers should take notice that the NLRB has adopted a broad definition of protected concerted activity. The definition broadly includes internal complaints about discrimination in hiring and promotion, complaints about pay equity, wage rates, working conditions, abusive supervisors and includes virtually all forms of whistleblowing and participation in lawsuits to name a few. The NLRB has shown a willingness to protect workplace safety complaints under a reasonable belief standard. Further, the NLRB continually seeks to expand the definition of protected concerted activities meaning the range of protected concerted activities will likely continue to expand. Therefore, if the PRO Act becomes law, employers can expect the filing of civil suits under this provision of the PRO Act to quickly explode.
Employers should closely examine whether employee activity is protected and concerted under the NLRB’s definition, because the damages available under the PRO Act are draconian. The PRO Act specifically provides for back pay (with no set off for interim earnings), liquidated damages equal to twice the back pay, possible front pay, consequential damages, and punitive damages. The prevailing party may also seek reasonable attorney’s fees.
The PRO Act will likely cause a sea change in employment litigation. Claims now made to the EEOC or the DOL, or filed under Title VII or the FLSA, will likely be filed as PRO Act claims given the damages available. Though the PRO Act has been in legislative limbo since February 2020, its expansive labor union and employee protection provisions may be a helpful forecast of potential proposed changes under the incoming administration.
For assistance with any labor or employment advice, please contact your Baker McKenzie employment attorney.