WASHINGTON—An administrative law judge at the National Labor Relations Board has found TBC Corp. in violation of the National Labor Relations Act for requiring employees to sign a binding arbitration agreement.
TBC said it was disappointed that Administrative Law Judge Michael A. Rosas did not heed the various appeals court judgments that said the company's binding arbitration arrangements were legal.
Rosas handed down his decision Oct. 14, fourteen months after Luis Rodriguez, the charging party in the case, filed a complaint with the NLRB.
According to case documents, TBC—one of the nation's largest tire retailers under the Tire Kingdom, Merchant's Tire, NTB, Big O Tires and other store names—began requiring new hires in October 2013 to sign an agreement to submit all claims against the company to binding arbitration and waive all participation in class or collective actions against TBC.
TBC further required existing employees to sign the agreement in March 2014, according to Rosas' decision.
Workers' and unemployment compensation claims were specifically excluded from the agreement, as were claims expressly precluded from arbitration by federal or state statute, according to the decision. The agreement also included a mechanism for judicial enforcement to compel arbitration and enforce or vacate an arbitration award if permitted by applicable law, it said.
Rodriguez was an employee of the Tire Kingdom store in Kissimmee, Fla., from August 2014 to February 2015, the decision stated.
In the spring of 2015, an attorney for Rodriguez and other Tire Kingdom employees notified the company of alleged overtime violations of the Fair Labor Standards Act. A TBC executive replied that the claim could not be addressed except by binding arbitration.
In June 2015, two former TBC employees filed an FLSA class action complaint against the company in a Florida federal district court, and Mr. Rodriguez filed a motion to become an opt-in plaintiff in the case. TBC sought dismissal of the case, and in July 2016 a federal judge issued an order to compel arbitration.
Meanwhile, Rodriguez's NLRB case against TBC continued. In an Oct. 7, 2016, brief to Rosas, the company argued that Supreme Court precedent and other factors barred any NLRB consideration of the arbitration agreement.
“The agreement expressly delegates to courts the authority to determine the enforceability of the agreement,” TBC said in its brief. “If any aspect of the agreement is found to be unenforceable, the remainder of the agreement should be enforced according to its terms.”
However, Rosas found that the arbitration agreement was illegal. Supreme Court precedent holds class action waivers unlawful, and the TBC arbitration agreement also unlawfully restrained TBC employees from failing unfair labor practice charges with the NLRB, he ruled.
Rosas also ruled against TBC's 2010 rule barring solicitation of any sort on company property, declaring it “overly broad and presumptively invalid.”
Rosas recommended to the NLRB that TBC be ordered to rescind or revise the arbitration agreement, reimburse Mr. Rodriguez and other FLSA lawsuit plaintiffs for litigation and related expenses, and submit a motion to the Florida federal district court to vacate the arbitration order.
The case now goes to the full NLRB for consideration.
“We are disappointed that the NLRB administrative law judge did not adopt the rationale articulated by various federal courts of appeal affirming that arbitration agreement with class action waivers are lawful,” TBC said in a statement.
“Further, the legality of Respondents' arbitration agreement has previously been considered, upheld and enforced by numerous federal courts,” the company said. “Therefore, we intend to seek further review of Judge Rosas' determination.”