By Christian J. Rowley

On January 3, 2012 decision in D.R. Horton, 357 NLRB 184, the NLRB held that employer-employee agreements mandating the arbitration of non-National Labor Relations Act (NLRA) claims, but prohibiting class actions, violate the NLRA (see our One Minute Memo:

While nothing is certain, it is highly likely that this decision  eventually will be overturned by the federal courts, as it appears contrary to both the language and intent of the Federal Arbitration Act, and last year’s Supreme Court decision in the AT&T Mobility, LLC. v. Concepcion case, discussed here:

Not to be outdone, however, the NLRB’s Acting General Counsel, Lafe Solomon, issued a memorandum to NLRB field offices on January 20, 2012 directing significant changes to the NLRB’s longstanding arbitration deferral policy that significantly limits the use of dispute resolution systems specifically designed by employers and unions to meet their particular needs.

Under the so-called Collyer policy, the NLRB defers making a final determination on certain unfair labor practice (“ULP”) charges if a grievance involving the same issue can be processed under the grievance/arbitration provisions of the parties’ collective bargaining agreement.   The announced purpose of the Board’s deferral policy (the “Collyer policy”) is to encourage the parties to resolve issues directly through their collectively-bargained dispute resolution procedures without unnecessary government intervention. Collyer Insulated Wire 192 NLRB 837.
Earlier, the Acting General Counsel initially modified the Collyer deferral policy by instructing the NLRB field offices not to “defer to an arbitral resolution unless it is shown that the statutory [NLRA] rights have adequately been considered by the arbitrator.”  Last week’s directive goes even further by instructing NLRB field offices not to defer cases to arbitration where arbitration will not resolve the case within one year.  This new policy applies to cases that have already been deferred to arbitration, but have been pending for more than one year, as well as new cases in which it is deemed unlikely that the arbitration will be completed within a year.

The Acting General Counsel justifies this change in policy as furthering the goal of speedy resolution of disputes, particularly where it appears that the NLRB’s ULP charge processes will be initiated sooner than arbitration.  What he overlooks, however, are the notorious and well documented delays in the NLRB’s decisional processes that can leave cases languishing for years.  These delays have resulted in the NLRB being referred to as the “Rip Van Winkle” of federal agencies because of its often inexcusable delay in issuing decisions.

Moreover, what Mr. Solomon also overlooks is that the Collyer deferral process generally works well, in our experience, to protect both management and labor, and serve the interests of the Board.  In any collective bargaining relationship, the parties occasionally (or frequently in some cases) have disputes that are adjusted through the parties’ grievance and arbitration process.  The nature of this process often results in compromises by both parties, particularly when the passage of time helps to cool tempers or to moderate the perceived significance of a dispute to the parties. Consequently, the vast majority of “Collyerized” disputes end up dropped or conceded by one or the other parties, or are resolved to the parties’ mutual satisfaction either through negotiation or the arbitration process.   This save the Board a huge amount of time that would otherwise be wasted on investigating and litigating disputes that parties (or an arbitrator) can eventually work out if given time and space for the parties’ grievance and arbitration process to work.

Further, the new rule ignores the reality of arbitral process and the importance of finality for an arbitrators’ decision. Under the Board’s new rules, it may actually make sense for one or both parties to file a Board charge whenever remotely possible, in conjunction with a contractual grievance.  Filing of a charge may, in effect, give the party a second “bite at the apple” if they are dissatisfied with the arbitrator’s decision and wish to challenge the outcome on a collateral basis.  Given the impossibility of dictating to an arbitrator what he or she must include or discuss in his or her decision, it will be very difficult for the parties to ensure that an arbitrator’s decision clearly “adequately considers” the NLRA rights.  Further, open issues such as what level of deference, if any, will be given by the Board to the arbitrator’s factual determinations or decisions, what is meant by “adequately consider,” and so forth,  will generate litigation at the Board and courts for years to come and greatly weaken the sense of finality that is critical for the arbitration process.