03/06/2026: Board Upholds Arbitration Confidentiality Rule
The effort to modify California Commerce Club is dead for now.
Pfizer, Inc., 374 NLRB No. 55, 10-CA-175850 (Published Board Decision)
The Board issued a supplemental decision dismissing a complaint alleging that Pfizer violated Section 8(a)(1) of the NLRA by maintaining a confidentiality provision in its mandatory arbitration agreement. The case had a lengthy procedural history: an ALJ originally found the confidentiality clause unlawful, the Board then remanded for reconsideration under the analytical framework established in Boeing Co., and the Board now resolves the matter by applying its intervening decision in California Commerce Club, Inc.
The confidentiality clause at issue required employees to keep arbitration proceedings, discovery disclosures, submissions, hearings, and awards confidential, subject to limited exceptions. It also included a carve-out stating that nothing in the clause would prohibit employees from discussing wages, hours, or other terms and conditions of employment.
The majority (Members Murphy and Mayer) held that the clause is lawful under California Commerce Club, which established that arbitration confidentiality provisions are shielded by the Federal Arbitration Act (FAA) to the extent they govern the rules under which arbitration is conducted. The majority found that the Pfizer clause’s coverage of discovery disclosures, submissions, hearings, and awards all constitute integral aspects of the arbitral proceeding itself, placing them squarely within FAA protection. The majority also noted that the explicit Section 7 carve-out reinforced that pre-existing information employees possess independently of the arbitration remains freely discussable.
Member Prouty concurred in the result only, applying California Commerce Club as controlling precedent in the absence of a three-member majority to overrule it, but wrote separately to argue that the decision was wrongly decided. Prouty contended that employees’ right to freely discuss workplace conditions — including information arising from arbitration proceedings — is a substantive Section 7 right, not a procedural one, and that the FAA does not require enforcement of contract provisions that violate the NLRA. Prouty distinguished Epic Systems Corp. v. Lewis, which addressed only the procedural right to class action processes rather than the well-established substantive right of employees to communicate about workplace conditions. He further argued that confidentiality, unlike bilateralism, is not a fundamental attribute of arbitration, and that courts have frequently invalidated party confidentiality requirements in arbitration agreements without conflicting with the FAA.
The ALJ’s supplemental decision, included in the record, had reached the opposite conclusion, applying Boeing and finding the clause unlawful as a Category 3 work rule. The ALJ reasoned that arbitration is itself a condition of employment, that the confidentiality clause directly chilled employees’ Section 7 right to discuss and publicly disclose working conditions, that the “limiting sentence” failed to adequately preserve those rights, and that Pfizer’s asserted business justification — fostering trust in the arbitration process — was insufficiently concrete to outweigh the substantial harm to core Section 7 rights.
The Board’s order dismisses the remaining complaint allegations.
Significant Cases Cited
California Commerce Club, Inc., 369 NLRB No. 106 (2020): Established that confidentiality provisions in arbitration agreements specifying rules of arbitral proceedings are shielded by the FAA and do not violate the NLRA.
Epic Systems Corp. v. Lewis, 584 U.S. 497 (2018): Supreme Court held that the NLRA does not prohibit class or collective action waivers in arbitration agreements, and that the FAA requires enforcement of such agreements according to their terms.
Boeing Co., 365 NLRB No. 154 (2017): Replaced the prior “reasonably construe” standard with a balancing test weighing the nature of a rule’s impact on NLRA rights against the employer’s legitimate justifications for maintaining it.
Volt Information Sciences, Inc. v. Board of Trustees of Leland Stanford Junior University, 489 U.S. 468 (1989): Supreme Court held that the FAA requires enforcement of arbitration agreement provisions that specify the rules under which arbitration will be conducted.
National Licorice Co. v. NLRB, 309 U.S. 350 (1940): Supreme Court affirmed that employers cannot use contracts to nullify NLRA obligations or strip employees of rights guaranteed by the Act.
Rosewood Care, LLC D/B/a Rosewood Rehabilitation and Nursing, 374 NLRB No. 53, 03-CA-297817 (Published Board Decision)
The Board adopted ALJ Andrew Gollin’s findings and conclusions in full, affirming violations of Sections 8(a)(1), (3), and (5) of the NLRA at a skilled nursing and rehabilitation facility in Rensselaer, New York, operated by Rosewood Care, LLC. The employer had restricted union representatives to a basement breakroom, called police on them for accessing other areas of the facility, banned two representatives and threatened them with criminal trespass charges, discharged an employee shortly after he was elected a union delegate, and ceased processing all pending grievances after the union filed unfair labor practice charges.
The Board’s adoption of the ALJ was not without modification, however, on several points.
On adverse inference: The ALJ drew an adverse inference from the employer’s failure to call its part owner, Israel Frankel, as a witness. The Board majority found it unnecessary to resolve the employer’s exception to that inference, concluding it had no material impact on the Section 8(a)(1) violations found. Member Prouty would have affirmed the adverse inference on its merits.
On remedies: The ALJ recommended a notice-mailing remedy, but the Board majority declined to adopt it, finding the Board’s traditional remedies sufficient. Member Prouty would have adopted the mailing remedy. The Board also corrected the ALJ’s recommended Order, which had inadvertently omitted a directive to rescind the numerous unilateral changes found — spanning dozens of specific dates in 2022 — and added standard language requiring their rescission. The Board further added a requirement that the employer immediately withdraw any outstanding trespass notices and criminal trespass charges against the union or its representatives, a remedy the ALJ had not included in the recommended Order despite finding those actions unlawful.
On the expanded backpay standard from Thryv: The ALJ ordered compensation for direct or foreseeable pecuniary harms beyond lost wages, consistent with Thryv, Inc. Members Murphy and Mayer noted they do not endorse that precedent but applied it in the absence of a three-member majority to overrule it, leaving open the possibility of future reconsideration.
Significant Cases Cited
Wright Line, 251 NLRB 1083 (1980): Established the burden-shifting framework for evaluating employer motivation in alleged discriminatory discharge cases under Section 8(a)(3), requiring the General Counsel to first establish a prima facie case of unlawful motive before the burden shifts to the employer.
Turtle Bay Resorts, 355 NLRB 706 (2010): Held that a non-employee union representative’s access to employer premises pursuant to a contractual access clause or established past practice is protected Section 7 activity, and that interference with such access violates the NLRA.
NLRB v. Katz, 369 U.S. 736 (1962): Established that an employer may not unilaterally change represented employees’ terms and conditions of employment without first providing the union notice and an opportunity to bargain.
Fred Meyer Stores, Inc., 368 NLRB No. 6 (2019): Held that union representatives lose the protection of the NLRA when their conduct constitutes a dramatic and unreasonable departure from established past practice regarding facility access.
Thryv, Inc., 372 NLRB No. 22 (2022): Expanded the Board’s standard backpay remedy to include compensation for all direct or foreseeable pecuniary harms flowing from an unlawful discharge, beyond traditional lost wages and benefits.
Healthy Minds, Inc. And House of Hope of Bastrop, LLC, a Single Integrated Enterprise, 374 NLRB No. 56, 15-CA-231767 (Published Board Decision)
The Board issued a supplemental decision in a backpay compliance proceeding stemming from a 2021 unfair labor practice finding against Healthy Minds, Inc. The original decision had found that Healthy Minds unlawfully discharged employee Kimberly Defrese-Reese in violation of Section 8(a)(1) of the NLRA and ordered backpay. A compliance specification was later issued to determine the amounts owed, and it named additional respondents: affiliated company House of Hope of Bastrop, LLC, and three individuals — Angela Nichols, James Garland Smith, and Jerry Brown — on theories of single-employer status and personal derivative liability.
Most respondents failed to file timely answers to the compliance specification. Smith filed a late answer, but the Board found it legally insufficient because it failed to specifically address the factual allegations supporting single-employer status and the transactions underlying his alleged personal liability. Under Board Rule 102.56(c), unanswered or inadequately answered allegations are deemed admitted.
On the single-employer question, the Board admitted the factual allegations in paragraphs 1(a)–(c) establishing that Healthy Minds and House of Hope shared common officers, ownership, management, labor policies, and personnel, making them jointly and severally liable as a single integrated enterprise.
On individual liability, the Board pierced the corporate veil as to Nichols and Brown based on admitted allegations that they failed to observe corporate formalities and diverted or commingled corporate assets. The Board applied the standard from White Oak Coal requiring both a unity of interest sufficient to render corporate and individual identities indistinct, and a showing that adherence to the corporate form would sanction fraud or injustice. Smith’s answer was found sufficient only as to paragraphs 3(g)–(i), which specifically allege he diverted assets with intent to defraud and that those transfers lacked reasonably equivalent value — the Board ordered a hearing before an ALJ limited to those remaining allegations.
On backpay amounts, the Board admitted the uncontroverted compliance specification calculations as to Defrese-Reese’s lost earnings and benefits, with interest to accrue through the date of payment and adjustments for adverse tax consequences.
Significant Cases Cited
White Oak Coal, 318 NLRB 732 (1995): Established the Board’s two-part test for piercing the corporate veil — requiring a unity of interest between the corporation and individuals such that their identities are indistinct, and a finding that maintaining the corporate form would sanction fraud or injustice.
Kolin Plumbing Corp., 337 NLRB 234 (2001): Addressed procedural limitations on participation in hearings by respondents who have defaulted on portions of a compliance proceeding.
Bryan Adair Construction Co., 341 NLRB 247 (2004): Established that a supplemental compliance order need not repeat remedial actions already contained in the underlying unfair labor practice order.
Valley Radiology, P.A., JD-14-26, 10-CA-324512 (ALJ Decision)
An ALJ ruled that Valley Radiology, P.A., a North Carolina radiology practice, violated Section 8(a)(1) of the NLRA by offering a separation agreement to Dr. Leena Mammen that contained overbroad non-disparagement and confidentiality clauses.
The facts were straightforward. When Dr. Mammen left her employment in July 2023 with $25,000 of a signing bonus loan still outstanding, Valley Radiology offered to forgive that balance if she signed a separation agreement. The agreement’s non-disparagement clause prohibited her from saying or doing anything to “disparage,” “injure,” or “harm” the company or its affiliates. The confidentiality clause barred her from disclosing the existence or terms of the agreement to anyone outside a narrow list of exceptions.
The ALJ applied McLaren Macomb, which holds that merely offering a separation agreement containing language broad enough to chill Section 7 rights itself constitutes a Section 8(a)(1) violation — regardless of whether the employee signs it. The respondent conceded the clauses were governed by McLaren Macomb but stated its intent to seek reversal of that precedent at the Board level. The ALJ acknowledged that posture but applied McLaren Macomb as binding current law. The non-disparagement clause mirrored language found unlawful in McLaren Macomb because it would sweep in protected conduct such as filing Board charges or making statements about workplace conditions. The confidentiality clause likewise tracked language invalidated in McLaren Macomb, since it would effectively prohibit an employee from even disclosing an unlawful agreement provision by filing an unfair labor practice charge.
On remedy, the ALJ departed from the General Counsel’s position. The GC had sought an order requiring Valley Radiology to re-offer the full severance package — including loan forgiveness — with only the unlawful clauses removed. The ALJ rejected that approach, reasoning that the underlying signing bonus loan and its forgiveness were unrelated to the unfair labor practice, that ordering forgiveness would impinge on freedom of contract without sufficient public interest justification, and that McLaren Macomb itself imposed no such remedy. The order requires Valley Radiology to rescind or revise the unlawful provisions and offer Dr. Mammen a lawful separation agreement, along with standard notice posting obligations.
Significant Cases Cited
McLaren Macomb, 372 NLRB No. 58 (2023): The Board held that proffering a separation agreement containing overbroad non-disparagement and confidentiality clauses violates Section 8(a)(1) of the NLRA.
American Freightways Co., 124 NLRB 146 (1959): Established the standard that employer conduct violates Section 8(a)(1) if it has a reasonable tendency to interfere with, restrain, or coerce employees in the exercise of Section 7 rights.
Baylor University Medical Center, 369 NLRB No. 43 (2020): Held, pre-McLaren Macomb, that severance agreements were distinguishable from work rules because they addressed only post-employment matters; overruled by McLaren Macomb.
IGT d/b/a International Game Technology, 370 NLRB No. 50 (2020): Similarly held that severance agreements did not implicate Section 7 rights because they concerned post-employment conduct; overruled by McLaren Macomb.
American Automobile Association of Northern California, Nevada & Utah, JD-15-26, 32-CA-280838 (ALJ Decision)
ALJ Arthur J. Amchan found that AAA of Northern California committed widespread NLRA violations following Teamsters Local 665’s successful June 2021 representation election covering roughly 430 commissioned insurance agents across 78 California branches.
Applying Wright Line, the ALJ found five unlawful terminations. In each case, the employee’s invocation of Weingarten rights — requesting Business Agent Tom Woods at investigatory interviews — established AAA’s knowledge of union activity. The ALJ found AAA failed to show it would have terminated any of the five absent their union activity, relying heavily on evidence of disparate treatment and the uncontradicted testimony of former assistant manager Pamela Felix, who stated that a company VP told managers shortly after the election to “pull back support” on union agents without making it obvious.
On unilateral changes, the ALJ found multiple Section 8(a)(5) violations for AAA’s failure to bargain before tightening counter duty, work-from-home, flex-time, and PTO policies across several branches. The ALJ also found that AAA violated Section 8(a)(3) and (5) by excluding unit employees from the long-standing Circle of Excellence travel award while continuing it for non-unit workers — conduct the ALJ found inherently destructive of employee rights under NLRB v. Great Dane Trailers. Additional violations included an overbroad handbook confidentiality provision that employees would reasonably read as prohibiting wage discussions, subpoenas seeking information about employees’ protected activities and NLRB cooperation, and denial of an employee’s right to consult with her union representative before and during an investigatory interview.
Several allegations were dismissed, including the claim that AAA unlawfully stopped hiring bargaining unit agents, the Stockton branch closure (governed by First National Maintenance as a non-mandatory bargaining subject), and various workplace change claims lacking adequate first-hand evidentiary support.
The remedy requires reinstatement and make-whole relief for the five discharged employees, restoration of pre-February 2021 workplace policies at all affected branches, and compensation to all unit employees for lost Circle of Excellence benefits.
Significant Cases Cited
Wright Line, 251 NLRB 1083 (1980): Establishes the burden-shifting framework for discriminatory discharge cases, requiring the General Counsel to show protected activity was a motivating factor before the burden shifts to the employer to prove it would have acted the same regardless.
NLRB v. Great Dane Trailers, Inc., 388 U.S. 26 (1967): Holds that employer conduct inherently destructive of employee rights raises a presumption of unlawful motive, requiring the employer to establish a legitimate justification.
First National Maintenance Corp. v. NLRB, 452 U.S. 666 (1981): Holds that an employer’s decision to close part of its business is not a mandatory subject of bargaining under the NLRA, though bargaining over effects remains required.
Atlantic Steel Co., 245 NLRB 814 (1979): Sets out the four-factor test for determining whether an employee’s conduct during protected activity loses NLRA protection.
Jennie-O Foods, Inc., 301 NLRB 305 (1991): Holds that stricter rule enforcement following an employer’s awareness of union organizing establishes a prima facie case of discriminatory motive, shifting the burden to the employer to show enforcement was unrelated to union activity.