D.C. Circuit sided with the National Labor Review Board (NLRB) in the fight over a Toyota dealership’s mandatory arbitration policy. The court found that the provision to bar workers from pursuing class litigation is illegal. The Law Office of Blumenthal, Nordrehaug & Bhowmik originally filed the NLRB unfair labor practice charge on behalf of Richard Vogel.

Legal scholars from various academic organizations, including University of Illinois, the University of California, Los Angeles and the University of Texas presented arguments that Price-Simms, Inc.’s use of a class action waiver in their employment agreement should be barred. Arguments were based on National Labor Relations Act of 1935, and the Norris-LaGuardia Act of 1932. Price-Simms, Inc. is the company that sells and services vehicles under the name Toyota Sunnyvale located out of Sunnyvale, California.

The university professors pointed out that Norris-LaGuardia prohibits the enforcement of an agreement that blocks employees from joining together in an attempt to protect their own rights in the workplace. According to this argument, the class action waiver provision that the Toyota dealership had in place in their mandatory employment agreement is therefore precluded.

The events that led to the Norris-LaGuardia enactment clearly shows that Congress intended to bar enforcement of agreements preventing employees to join unions and other agreements that require employees to settle grievances on an individual basis. Therefore, Norris-LaGuardia bars the enforcement of the employee agreement so long as it includes wording preventing employees from joining together or acting in concert to enforce rights in the workplace.

Richard Vogel, the Price-Simms employee who filed the original complaint to the NRLB, argued that employees have a “substantive right” according to NLRA to join a union, file lawsuits individually or jointly, and in general, take action to ensure they are provided with basic workplace rights. Prior to the enactment of the NLRA, Norris-LaGuardia barred enforcement of agreements that forced employees to forgo their right to act collectively. Vogel argued alongside the scholars, presenting arguments supporting the NLRB’s decision that the class action waiver included in the Price-Simms arbitration agreement should be recognized as unlawful.

The employment agreement under discussion has been in place since at least April 2014. By making the employment agreement mandatory, the company removed the right for their employees to pursue any collective or class actions. The issue stems from the complaint made by Vogel to the NLRB after he was made to arbitrate a proposed class action over wage-and-hour violations in California state court. The Price-Simms’ arbitration agreement was found in violation of the NLRA in late 2015 and the company was ordered to revise their related policies. The Toyota dealership filed an appeal a month after the original findings claiming that the order incorrect under the law and unsupported by the record. The NLRB filed a cross appeal. The two appeals were consolidated in January 2016 (Price-Simms Inc. v. NLRB, no. 15-1457, U.S. Court of Appeals for the District of Columbia Circuit.

If you have questions regarding the legality of mandatory employment agreements, or if you feel that there is an issue of workers’ rights to address in your workplace, please get in touch with an experienced southern California employment law attorney at Blumenthal, Nordrehaug & Bhowmik.