The real estate company CBRE Inc.’s mandatory arbitration agreements violate federal labor law, according to an administrative law judge ruling that highlighted controversial employee restrictions that are at the center of a U.S. Supreme Court case this term.
Administrative law judge John Giannopoulos at the National Labor Relations Board ruled that the global commercial real estate firm’s employment agreements violate labor law by requiring that disputes be handled through arbitration and not through “any class, collective or representative action.”
The administrative case, filed by a CBRE facility manager named Steve Thoma, is far from settled. But it exposes the potential broad impact that the Supreme Court litigation could have on the power of employees to form class actions. Dozens of pending labor cases involving major companies will be affected by the outcome of the high-court litigation.
Littler Mendelson’s Gordon Letter in Los Angeles, representing CBRE, was not immediately reached for comment Monday. A CBRE spokesman said in a statement: “We believe that this decision does not accurately apply the law to the facts, and we plan to appeal.”
Attorneys for Thoma did not immediately respond to request for comment on the administrative law judge’s ruling.
Thoma has a pending civil case against CBRE and JPMorgan Chase that’s on hold in the U.S. Court of Appeals for the Ninth Circuit. The appeals court, citing the action in the Supreme Court, is awaiting the outcome of the case there.
In October, the Supreme Court heard arguments in a consolidated case that considered whether workplace arbitration agreements that ban class actions violate the labor law because they constrict employees’ right to engage in “concerted activities.” The consolidated cases before the justices are: National Labor Relations Board v. Murphy Oil USA; Epic Systems v. Lewis; and Ernst & Young v. Morris.
Thoma sued in California federal district court and filed a labor complaint in August with the NLRB, claiming he was misclassified as an exempt employee and therefore not entitled to overtime. His attorneys at California-based firm Baker, Curtis & Schwartz are seeking class action status for all similarly situated employees. Thoma’s federal civil case alleges CBRE and Chase misclassified their facility managers to exempt them from overtime and other protections under California and federal law.
The NLRB administrative judge, ruling on Nov. 24, called CBRE’s arbitration agreement “unlawfully vague and likely to leave employees unwilling to risk violating the rule by exercising Section 7 rights,” which allow workers to join together in concerted activity. Giannopoulos ordered CBRE to end agreements that restrict rights to file charges with the NLRB and rescind the arbitration agreement in all its forms.
One issue that might arise in any appeal in Thoma’s administrative case could focus on recusals. William Emanuel, one Trump’s two appointees to the NLRB, is a former Littler Mendelson shareholder in Los Angeles. Employee-side labor attorneys have raised questions about whether and when Emanuel should be required to recuse in current disputes that have ties to his firm or to his former clients.
Emanuel formerly represented CBRE and Chase, among 49 former clients that he said would cause him to recuse, for a year, unless he received a waiver, according to his financial disclosure filed at the U.S. Office of Government Ethics.
The CBRE case was one of dozens noted in a letter sent to Emanuel by Senate Democrats asking the new board member to clarify his commitment to not participating in cases involving former clients. Staff for Senate Democrats identified dozens of pending cases before the NLRB that involve the 49 companies Emanuel noted in his financial disclosure documents.
The administrative law judge’s decision against CBRE is posted below.