U.S. labor board could limit gag clauses in worker arbitration pacts

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The seal of the National Labor Relations Board at their headquarters in Washington, D.C. REUTERS/Andrew Kelly

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  • Board calls for input on validity of confidentiality clauses
  • Trump-era NLRB said employers can keep legal proceedings confidential

(Reuters) - The National Labor Relations Board has signaled an interest in limiting companies' ability to require workers to keep arbitration proceedings confidential, which would be a reversal of Trump-era precedent.

The board on Tuesday invited briefs from the public on the issue in a case involving Kroger Co subsidiary Ralphs Grocery Co, asking whether employers unlawfully interfere with workers' rights to file complaints with the NLRB by barring them from disclosing details about legal proceedings.

A majority of private-sector workers are bound by agreements to arbitrate legal disputes rather than bring them to court, and those pacts often include confidentiality provisions. In the wake of the #MeToo movement, some companies have limited their use of mandatory arbitration and some states and cities have banned it.

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The U.S. Supreme Court in the 2018 case Epic Systems Corp v. Lewis said requiring arbitration of legal claims as a condition of employment does not violate the National Labor Relations Act.

The high court did not address the validity of confidentiality clauses, which the Trump-era NLRB subsequently said were legal.

The board's Democratic majority on Tuesday asked whether it should reject those recent rulings and find that those provisions could improperly discourage workers from reporting unfair labor practices to the NLRB. And the board asked what standard it should apply to determine whether individual confidentiality agreements are legal.

Republican NLRB members Marvin Kaplan and John Ring dissented, saying the Epic Systems ruling made clear that federal law requires arbitration agreements to be enforced according to their terms - including confidentiality clauses.

The case is Ralphs Grocery Co, National Labor Relations Board, No. 21–CA–073942.

For Ralphs: Timothy Ryan of The Offices of Timothy F. Ryan

For the charging party: Melissa Grant of Capstone Law

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Dan Wiessner (@danwiessner) reports on labor and employment and immigration law, including litigation and policy making. He can be reached at daniel.wiessner@thomsonreuters.com.