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NLRB Judge Knocks UnitedHealth Employee Arbitration Pact

Law360—Scott Flaherty

UnitedHealth Group Inc. violated federal labor law when it forced workers who had filed putative wage-and-hour class actions in federal court to instead arbitrate their allegations individually, a National Labor Relations Board judge ruled Tuesday.

NLRB Administrative Law Judge Raymond P. Green sided with a number of employees who filed unfair labor practice allegations against UnitedHealth, finding that the health insurer's enforcement of an employee arbitration agreement violated the National Labor Relations Act.

Some of the employees that brought the NLRB case had previously participated in putative class actions that alleged in federal court that UnitedHealth violated the Fair Labor Standards Act by not properly paying overtime to certain workers. The insurance company, citing the arbitration agreement, sought to force those wage-and-hour cases into individual arbitration and, in several rulings in 2013 and 2014, courts granted UnitedHealth's motions to compel.

At the NLRB, the employees argued that, by maintaining and enforcing the arbitration agreement in those court proceedings, UnitedHealth had violated Section 7 of the NLRA, which confers employees the rights to organize and engage in concerted activity. Referencing the board's precedent in D.R. Horton — which determined that mandatory arbitration pacts requiring workers to waive their class or collective action rights violate the NLRA — Judge Green on Tuesday agreed with the UnitedHealth employees' argument.

“I am going to conclude that by maintaining its arbitration policy and by enforcing arbitration agreements through court proceedings, the [UnitedHealth] respondents have interfered with the rights of employees to engage in collective actions for their mutual aid and protection,” Judge Green said.

The ruling Tuesday comes in a case brought to the labor board in January, following the filing of putative wage actions against UnitedHealth in federal court. In one of those cases, led by sales representative Janira Torres, a New York federal court in February 2013 granted UnitedHealth's motion to compel individual arbitration of claims that the insurer misclassified its sales representatives as exempt from overtime under the FLSA and state law.

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In the decision Tuesday, Judge Green found that the UnitedHealth arbitration pact, as it precludes employee collective and class actions, violated the NLRA. The judge recommended an order that the health insurer rescind or revise the arbitration policy to “make it clear to employees that the policy and agreements made pursuant to the policy do not constitute a waiver in all forums of their rights to maintain class or collective actions relating to their wages, hours, or other terms and conditions of employment.”

The judge recommended that UnitedHealth reimburse the employees for their legal costs in fighting the insurer's motions to dismiss or compel arbitration in the Torres and Litvinov federal court cases. Judge Green also recommended that UnitedHealth be required to file motions in court withdrawing the bids to dismiss or compel arbitration in those two cases.

An attorney representing the workers, Justin Swartz of Outten & Golden LLP, told Law360 Wednesday his clients were pleased with the NLRB judge's decision that UnitedHealth "violated their rights."

“It's important for workers to be able to pool their resources and act together," Swartz said. “This is the first step toward UnitedHealthcare workers being able to do so.”

An attorney for the insurance company did not immediately respond to a request for comment on Wednesday.

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The employees are represented by Justin Swartz and others of Outten & Golden LLP.

The case is UnitedHealthcare Services Inc. et al. and Aviles et al., case number 02-CA-118724, at the National Labor Relations Board.