Hoot Winc, LLC and Ontario Wings, LLC dba Hooters of Ontario Mills, Joint Employers

National Labor Relations Board - Board Decisions

May 6, 2020

369 N.L.R.B. 69 (N.L.R.B. 2020)

369 NLRB No. 69
NOTICE: This opinion is subject to formal revision before publication in the
bound volumes of NLRB decisions. Readers are requested to notify the Ex-
ecutive Secretary, National Labor Relations Board, Washington, D.C.
20570, of any typographical or other formal errors so that corrections can
be included in the bound volumes.
Hoot Winc, LLC and Ontario Wings, LLC d/b/a Hoot-
ers of Ontario Mills, Joint Employers and Alexis
Hanson and Jamie West and Chanelle Panitch.
Cases 31‒CA‒104872, 31‒CA‒104874, 31‒CA‒
104877, 31‒CA‒104892, 31‒CA‒107256 and 31‒
CA‒107259
May 6, 2020
SUPPLEMENTAL DECISION AND ORDER
BY CHAIRMAN RING AND MEMBERS KAPLAN AND
EMANUEL
On September 1, 2015, the National Labor Relations
Board issued a Decision and Order finding that the Re-
spondents violated Section 8(a)(1) of the National Labor
Relations Act (NLRA or Act) by maintaining a mandatory
arbitration agreement. Hooters of Ontario Mills, 363
NLRB No. 2 (2015). Applying the analysis set forth in
D. R. Horton, Inc., 357 NLRB 2277 (2012), enf. denied in
relevant part 737 F.3d 344 (5th Cir. 2013), and Murphy
Oil USA, Inc., 361 NLRB 774 (2014), enf. denied in rele-
vant part 808 F.3d 1013 (5th Cir. 2015), the Board found
the agreement unlawfully required employees, as a condi-
tion of their employment, to waive their right to pursue
class or collective actions in any forum, whether arbitral
or judicial. 363 NLRB No. 2, slip op. at 2. The Board
also found that the arbitration agreement violated the Act
on the basis that employees reasonably would construe it
to prohibit their right to file unfair labor practice charges
with the Board. Id., slip op. at 1–2.
The Respondents filed a petition for review with the
United States Court of Appeals for the Ninth Circuit. The
1 In Boeing, the Board overruled the “reasonably construe” prong of
the Lutheran Heritage standard that governed whether maintenance of a
policy that does not expressly prohibit Sec. 7 activity nevertheless vio-
lates Sec. 8(a)(1) of the Act. Lutheran Heritage Village-Livonia, 343
NLRB 646, 647 (2004). Under Boeing, the Board first determines
whether a challenged rule or policy, reasonably interpreted, would po-
tentially interfere with the exercise of rights under Sec. 7 of the Act. If
not, the rule or policy is lawful. If so, the Board determines whether an
employer violates Sec. 8(a)(1) of the Act by maintaining the rule or pol-
icy by evaluating two things: “(i) the nature and extent of the potential
impact on NLRA rights, and (ii) legitimate justifications associated with
the rule.” Boeing, slip op. at 3 (emphasis omitted). In conducting this
evaluation, the Board will strike a proper balance between the asserted
business justifications and the invasion of employee rights in light of the
Act and its policies, viewing the rule or policy from the employees’ per-
spective. Id. As a result of the Boeing analysis, “the Board will delineate
three categories” of work rules:
Category 1 will include rules that the Board designates as lawful to
maintain, either because (i) the rule, when reasonably interpreted, does
not prohibit or interfere with the exercise of NLRA rights; or (ii) the
Board filed a cross-application for enforcement, and the
Charging Parties filed a motion to intervene, which the
court granted. On May 21, 2018, the Supreme Court held
that employer-employee agreements that contain class-
and collective-action waivers and require individualized
arbitration do not violate Section 8(a)(1) of the Act and
should be enforced as written pursuant to the Federal Ar-
bitration Act (FAA). Epic Systems Corp. v. Lewis, 584
U.S. ___, 138 S. Ct. 1612, 1632 (2018).
On June 28, 2018, the Ninth Circuit granted the Board’s
motion to (1) summarily grant the Respondents’ petition
for review and deny enforcement of the portion of the
Board’s Decision and Order governed by Epic Systems,
and (2) remand the remainder of the case for further pro-
ceedings before the Board. Hoot Winc, LLC & Ontario
Wings, LLC v. NLRB, Nos. 15‒72839, 15‒72931 (9th Cir.
June 28, 2018). On November 20, 2018, the Board issued
a Notice to Show Cause why this case should not be re-
manded to the administrative law judge for further pro-
ceedings in light of Boeing Co., 365 NLRB No. 154
(2017).1 The General Counsel and the Respondents filed
statements of position, each opposing remand. Because
no party favors a remand and the remaining allegation may
be decided based on the existing record, we find that a re-
mand is unnecessary.
The Board has considered its previous decision and the
record in light of the General Counsel’s and the Respond-
ents’ statements of position. For the reasons set forth be-
low, we find that under Boeing and its progeny, the Re-
spondents’ arbitration agreement unlawfully restricts em-
ployee access to the Board and its processes. Accordingly,
we conclude that the Respondents violated Section 8(a)(1)
of the Act by maintaining the arbitration agreement.
potential adverse impact on protected rights is outweighed by justifica-
tions associated with the rule. . . .
Category 2 will include rules that warrant individualized scrutiny in
each case as to whether the rule would prohibit or interfere with NLRA
rights, and if so, whether any adverse impact on NLRA-protected con-
duct is outweighed by legitimate justifications.
Category 3 will include rules that the Board will designate as unlawful
to maintain because they would prohibit or limit NLRA-protected con-
duct, and the adverse impact on NLRA rights is not outweighed by jus-
tifications associated with the rule.
Id., slip op. at 3–4 (emphasis in original). The subdivisions of Category
1 were subsequently redesignated 1(a) and 1(b). See LA Specialty Pro-
duce Co., 368 NLRB No. 93, slip op. at 2 fn. 2 (2019). Placement of a
rule or policy in Category 1(a) does not result from balancing NLRA
rights and legitimate justifications. See id., slip op. at 2 (for a Category
1(a) rule, “there is no need for the Board to take the next step in Boeing
of addressing any general or specific legitimate interests justifying the
rule”). The Board in Boeing also decided to apply the new standard ret-
roactively to all pending cases. 365 NLRB No. 154, slip op. at 16–17.
DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD2
Background
At all material times, Respondents Hoot Winc, LLC and
Ontario Wings, LLC d/b/a Hooters of Ontario Mills (col-
lectively “Respondents”) have been joint employers of the
employees of Ontario Wings, LLC d/b/a Hooters of On-
tario Mills. At all material times, the Respondents have
maintained an “Agreement to Arbitrate” (“Arbitration
Agreement” or “Agreement”), which employees are re-
quired to sign as a condition of their employment. The
relevant portion of the Agreement reads as follows:
This Agreement requires you to arbitrate any legal dis-
pute related to your application for employment, the ap-
plication and[/]or interview process, your employment,
or the termination of your employment with Ontario
Wings, L.L.C. . . . .
By signing this Agreement, you and the Company2 each
agree that all Claims between you and the Company
shall be exclusively decided by arbitration . . . .
The Arbitration Agreement further defines “Claims” as
all disputes arising out of or related to your application
for employment, the application and recruitment pro-
cess, the interview process, the formation of the employ-
ment relationship, your employment by the Company,
or your separation from employment with the Company.
The term “Claims” includes, but is not limited to, any
claim whether arising under federal, state, or local law,
under a statute such as Title VII of the Civil Rights Act
of 1964, under a rule, under a regulation or under the
common law, including, but not limited [to] ANY
CLAIM OF DISCRIMINATION, SEXUAL OR
OTHER TYPE OF HARASSMENT, RETALIATION,
WRONGFUL DISCHARGE, ANY CLAIM FOR
WAGE AND HOUR VIOLATIONS, OR ANY
CLAIM FOR WAGES, COSTS, INTEREST,
ATTORNEYS’ FEES OR PENALTIES. “Claim” does
not include any dispute that cannot be arbitrated as a
matter of law.
GC Exh. 11 (emphasis in original).
Discussion
This case is controlled by the Board’s decisions in
Prime Healthcare Paradise Valley, LLC, 368 NLRB No.
10 (2019) (Prime Healthcare), Everglades College, Inc.
d/b/a Keiser University, 368 NLRB No. 123 (2019)
2 The Agreement defines “the Company” as “Ontario Wings, L.L.C
and its affiliates, subsidiaries, and parent companies, including without
limitation, HOOT WINC, LLC, California Hooters Opportunity Part-
ners, L.L.C (CHOP) as well as any Hooters restaurant where you have
applied for employment or have been hired for employment as well as
any of its officers, directors, employees, agents, owners, shareholders,
(Everglades), and Countrywide Financial Corp., Country-
wide Home Loans, Inc., and Bank of America Corp., 369
NLRB No. 12 (2020) (Countrywide).3 Consistent with the
clear congressional command in Section 10(a) of the Act
that the Board’s power to prevent unfair labor practices
“shall not be affected by any other means of adjustment or
prevention that has been or may be established by agree-
ment, law, or otherwise,” we held in Prime Healthcare
that the FAA does not authorize the maintenance or en-
forcement of arbitration agreements that interfere with an
employee’s right to file charges with the Board. 368
NLRB No. 10, slip op. at 5. We also held that an arbitra-
tion agreement that explicitly prohibits the filing of claims
with the Board or, more generally, with administrative
agencies must be found unlawful because such an agree-
ment constitutes an explicit prohibition on the exercise of
employee rights under the Act. Id.4
Where an arbitration agreement does not contain such
an express prohibition but rather is facially neutral, the
standard set forth in Boeing, above, applies. Id. Under
that standard, the Board must first determine whether that
agreement, “when reasonably interpreted, would poten-
tially interfere with the exercise of NLRA rights.” Boeing,
above, slip op. at 3. If it does, the Board will proceed to
analyze the rule under Boeing’s balancing test, weighing
the agreement’s potential interference with Section 7
rights against the employer’s legitimate business justifica-
tions. Id.
In Prime Healthcare, we concluded that where provi-
sions in an arbitration agreement or elsewhere make arbi-
tration the exclusive forum for the resolution of employ-
ment-related claims, including claims for violations of
federal statutes, then such provisions are unlawful and fall
within Boeing Category 3. 368 NLRB No. 10, slip op. at
6–7. As we explained, such provisions, reasonably inter-
preted, interfere with the exercise of the right to file
charges with the Board; such provisions significantly im-
pair employee rights, the free exercise of which is vital to
the implementation of the statutory scheme established by
Congress in the NLRA; and the adverse impact of such
provisions on employee rights and the administration of
the Act cannot be outweighed by any legitimate business
justification. Id.
Applying Prime Healthcare here, we conclude that the
Arbitration Agreement interferes with employee rights
ownership or parent, subsidiary, or affiliated entities.” GC Exh. 11 (em-
phasis in original).
3 The Notice to Show Cause in this case issued before the Board de-
cided these cases.
4 As we noted in Prime Healthcare, the Supreme Court in Epic Sys-
tems did not address whether the Act prohibits agreements that restrict
employees’ access to the Board or its processes. Id.
HOOT WINC, LLC 3
under the Act and falls within Boeing Category 3. Alt-
hough the Arbitration Agreement does not explicitly pro-
hibit an employee from filing a charge, it does interfere,
when reasonably interpreted, with the right to file charges
with the Board. The Agreement states that “all Claims be-
tween you and the Company shall be exclusively decided
by arbitration,” and it defines the term “Claims” as all em-
ployment-related disputes, including “any claim whether
arising under federal . . . law . . . [or] statute.” Employees
would reasonably interpret this language to restrict the fil-
ing of charges with the Board. See id., slip op. at 6 (rea-
sonably interpreted, provisions that make arbitration the
exclusive forum for the resolution of all employment-re-
lated claims restrict the filing of charges with the Board).
And, as we explained in Prime Healthcare, no legitimate
justification outweighs, or could outweigh, the adverse
impact of such a provision on employee rights and the ad-
ministration of the Act. Id., slip op. at 6–7.
Applying our recent decisions in Everglades and Coun-
trywide, we also conclude that the Agreement’s exclusion
clause is too vague to salvage the Arbitration Agreement.
The Agreement contains language excluding from the def-
inition of covered claims “any dispute that cannot be arbi-
trated as a matter of law.” We recently held in Country-
wide that “a reasonable employee interpreting vague, gen-
eralized exclusion-clause language . . . cannot be expected
to divine any intent to exclude from the coverage of an
arbitration agreement claims arising under the NLRA,
given that rank-and-file employees do not generally carry
law books and cannot be expected to have the expertise to
examine company rules from a legal standpoint.” 369
NLRB No. 12, slip op. at 3 (citing Everglades, 368 NLRB
No. 123, slip op. at 3–4) (internal quotations omitted). As
in Countrywide, the language at issue here, which ex-
cludes claims that “cannot be arbitrated as a matter of
5 In the “Facts and Procedural Background” section of their excep-
tions brief, the Respondents quote a provision of the Agreement, entitled
“Arbitrators’ Authority,” which states in part that the Agreement “shall
not be construed to deprive a party of any substantive right preserved by
law.” The Respondents do not rely on that provision in their argument,
and therefore we need not address it. In any event, however, Chairman
Ring and Member Kaplan would find this language legally insufficient
for the same reason the Agreement’s exclusion clause fails: both would
impermissibly require employees “to ‘meticulously determine the state
of the law’ themselves.” See, e.g., E. A. Renfroe & Co., 368 NLRB No.
147, slip op. at 3 (2019) (quoting Prime Healthcare, 368 NLRB No. 10,
slip op. at 3).
6 In adopting the finding of an 8(a)(1) violation, Member Emanuel
notes that the language of the arbitration agreement in the case at hand is
different from agreements that he has previously found lawful in Ever-
glades and Countrywide. In Everglades, the mandatory arbitration
agreement covered “[a]ny controversy or claim arising out of or relating
to Employee’s employment [or] separation from employment . . . except
where specifically prohibited by law.” Supra, slip op. at 1‒2. Similarly,
in Countrywide, the respondent’s arbitration agreement provided that
law,” would leave a reasonable employee in the dark as to
what exactly can and cannot be arbitrated “as a matter of
law.” Ibid.; see also Aryzta, LLC, 369 NLRB No. 55, slip
op. at 3 (2020) (finding that a clause excluding “any dis-
pute if arbitration of the dispute is prohibited by law” was
“insufficient to apprise employees that they may file
charges with the Board and otherwise access its pro-
cesses”).5
In sum, the language of the Arbitration Agreement,
when reasonably interpreted under Boeing, makes arbitra-
tion the exclusive forum for resolution of claims arising
under the Act, and the exclusion clause language is legally
insufficient. The Agreement restricts employee access to
the Board, and such restriction of Section 7 rights cannot
be supported by any legitimate business justification.
Therefore, the Agreement belongs in Boeing Category 3,
and we find that the Respondents violated Section 8(a)(1)
of the Act by maintaining it.6
ORDER
The Respondents, Hoot Winc, LLC and Ontario Wings,
LLC d/b/a Hooters of Ontario Mills, joint employers, On-
tario, California, their officers, agents, successors, and as-
signs, shall
1. Cease and desist from
(a) Maintaining an Agreement to Arbitrate that employ-
ees would reasonably believe bars or restricts their right to
file charges with the National Labor Relations Board.
(b) In any like or related manner interfering with, re-
straining, or coercing employees in the exercise of the
rights guaranteed them by Section 7 of the Act.
2. Take the following affirmative action necessary to
effectuate the policies of the Act.
(a) Rescind the Agreement to Arbitrate in all its forms,
or revise it in all its forms to make clear to employees that
the Agreement to Arbitrate does not bar or restrict
“[n]othing in this Agreement shall be construed to require arbitration of
any claim if an agreement to arbitrate such claim is prohibited by law.”
Supra, slip op. at 3. Giving effect to both the NLRA and FAA as a har-
monious whole, Member Emanuel found these arbitration agreements
lawful, as the mandatory exclusive arbitration of claims arising under the
NLRA would be “prohibited by law,” and therefore expressly excluded
from coverage under the plain language of these agreements. Country-
wide, supra, slip op. at 3 fn. 6; Everglades, supra, slip op. at 6‒7.
In contrast, here the Respondents’ Arbitration Agreement broadly co-
vers all employment-related claims, but contains an exclusion clause that
carves out from coverage “any dispute that cannot be arbitrated as a mat-
ter of law” (emphasis added). This exclusion clause clearly would not
encompass claims arising under the NLRA, as NLRA claims can be, and
often are, subject to arbitration through collectively-bargained dispute
resolution procedures. Accordingly, as the exclusion clause here would
not exempt NLRA claims from coverage, Member Emanuel agrees with
his colleagues that the Respondents’ Arbitration Agreement unlawfully
interferes with employees’ access to the Board’s processes in violation
of Sec. 8(a)(1). See Aryzta LLC, 369 NLRB No. 55, slip op. at 3 fn. 5
(2020).
DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD4
employees’ right to file charges with the National Labor
Relations Board.
(b) Notify all current and former employees who were
required to sign or otherwise became bound to the Agree-
ment to Arbitrate in any form that the Agreement to Arbi-
trate has been rescinded or revised and, if revised, provide
them a copy of the revised agreement.
(c) Post at their Ontario, California facility, and at all
other facilities where the unlawful arbitration agreement
is or has been in effect, copies of the attached notice
marked “Appendix.”7 Copies of the notice, on forms pro-
vided by the Regional Director for Region 31, after being
signed by the Respondents’ authorized representative,
shall be posted by the Respondents and maintained for 60
consecutive days in conspicuous places, including all
places where notices to employees are customarily posted.
In addition to physical posting of paper notices, notices
shall be distributed electronically, such as by email, post-
ing on an intranet or an internet site, and/or other elec-
tronic means, if the Respondents customarily communi-
cate with their employees by such means. Reasonable
steps shall be taken by the Respondents to ensure that the
notices are not altered, defaced, or covered by any other
material. If the Respondents have gone out of business or
closed the facility involved in these proceedings, the Re-
spondents shall duplicate and mail, at their own expense,
a copy of the notice to all current employees and former
employees employed by the Respondents at any time since
April 15, 2013.
(d) Within 21 days after service by the Region, file with
the Regional Director for Region 31 a sworn certification
of a responsible official on a form provided by the Region
attesting to the steps that the Respondents have taken to
comply.
Dated, Washington, D.C. May 6, 2020
______________________________________
John F. Ring, Chairman
______________________________________
Marvin E. Kaplan, Member
7 If the facilities involved in these proceedings are open and staffed
by a substantial complement of employees, the notices must be posted
within 14 days after service by the Region. If one or more of the facilities
involved in these proceedings are closed due to the Coronavirus pan-
demic, the notices must be posted within 14 days after the facility reo-
pens and a substantial complement of employees have returned to work,
and the notices may not be posted until a substantial complement of em-
ployees have returned to work. Any delay in the physical posting of
________________________________________
William J. Emanuel, Member
(SEAL) NATIONAL LABOR RELATIONS BOARD
APPENDIX
NOTICE TO EMPLOYEES
POSTED BY ORDER OF THE
NATIONAL LABOR RELATIONS BOARD
An Agency of the United States Government
The National Labor Relations Board has found that we vi-
olated Federal labor law and has ordered us to post and
obey this notice.
FEDERAL LAW GIVES YOU THE RIGHT TO
Form, join, or assist a union
Choose representatives to bargain with us on your
behalf
Act together with other employees for your bene-
fit and protection
Choose not to engage in any of these protected ac-
tivities.
WE WILL NOT maintain an Agreement to Arbitrate that
our employees reasonably would believe bars or restricts
their right to file charges with the National Labor Rela-
tions Board.
WE WILL NOT in any like or related manner interfere
with, restrain, or coerce you in the exercise of the rights
listed above.
WE WILL rescind the Agreement to Arbitrate in all its
forms, or revise it in all its forms to make clear that the
Agreement to Arbitrate does not restrict your right to file
charges with the National Labor Relations Board.
WE WILL notify all current and former employees who
were required to sign or otherwise became bound to the
Agreement to Arbitrate in any form that the Agreement to
Arbitrate has been rescinded or revised and, if revised, WE
WILL provide them a copy of the revised agreement.
HOOT WINC, LLC AND ONTARIO WINGS, LLC D/B/A
HOOTERS OF ONTARIO MILLS, JOINT EMPLOYERS
The Board’s decision can be found at
www.nlrb.gov/case/31-CA-104872 or by using the QR
paper notices also applies to the electronic distribution of the notice if
the Respondent customarily communicates with its employees by elec-
tronic means. If this Order is enforced by a judgment of a United States
court of appeals, the words in the notice reading “Posted by Order of the
National Labor Relations Board” shall read “Posted Pursuant to a Judg-
ment of the United States Court of Appeals Enforcing an Order of the
National Labor Relations Board.”
HOOT WINC, LLC 5
code below. Alternatively, you can obtain a copy of the
decision from the Executive Secretary, National Labor
Relations Board, 1015 Half Street, S.E., Washington, D.C.
20570, or by calling (202) 273–1940.