U.S. Supreme Court Rules Arbitration Can Resolve Discrimination Claims
Employers and their lawyers have long argued that it’s possible for an employer and its employees to agree to use arbitration or some type of alternative dispute resolution (ADR) program to resolve discrimination claims. The countervailing argument has been that since discrimination claims are based on statutes, there can be no such agreement, because an employee must be allowed to litigate any statutory right in court.
In a 5-4 decision, the U.S. Supreme Court has agreed with employers. In 14 Penn Plaza LLC V. Pyett, the Court found that a collective bargaining agreement (CBA) which clearly required employees to arbitrate claims arising under the Age Discrimination in Employment Act (ADEA) is enforceable. The Court’s ruling covers all kinds of discrimination claims and also applies to non-union employers.
The only way this opinion doesn’t hold is if the discrimination statute prohibits the use of arbitration to resolve claims. The ADEA has no such provision. Neither does Title VII of the Civil Rights Act (covering race, color, sex, national origin and religious discrimination) nor the Americans with Disabilities Act. Thus, an arbitration agreement like the one in this case precludes an employee from filing a lawsuit.
It’s likely there will be renewed efforts to include arbitration clauses covering discrimination claims in CBAs and to establish ADR programs doing the same at non-union employers. It’s vital that legal advice be used in putting these agreements and programs together.
But note. At present, there are pending before Congress the Civil Rights Act of 2008 and the Arbitration Act of 2007, both of which would prevent the use of arbitration agreements and ADR programs to resolve discrimination claims. While 14 Penn Plaza LLC v. Pyett is a big win for employers, stay tuned. We haven’t heard the last of this.
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About Chris Parker
Chris Parker's practice focuses on the representation and counseling of companies in matters pertaining to the workplace and the protection of their intellectual property and trade secrets. In addition to serving as an advocate for clients, Mr. Parker is also trained as a mediator and frequently serves as a third-party neutral.
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About Jimmy Daniel
Jimmy Daniel provides counseling to businesses of all sizes related to the employment relationship. He assists in the drafting of employment agreements, policies, and handbooks, as well as provides guidance related to compliance with federal, state, and local legislation such as the Fair Labor Standards Act and the Family and Medical Leave Act.
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About Larry Bridgesmith
While serving in an Of Counsel relationship with the firm, Mr. Bridgesmith also serves as the Executive Director at the Institute for Conflict Resolution at Lipscomb University and as an officer and principal in Strategic Resolutions Group, LLC. In these roles, Mr. Bridgesmith brings over 30 years of legal experience in dispute resolution and innovative workplace strategies to clients, students and business entities alike.
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John, Do you think there is a possibility in labor arbitrators using different standards to decide cases than trial judges? Aren’t labor arbitrators more likely to be influenced by the labor arbitration history on an issue, whereas a court judge more likely to be influenced by court cases?
Paul, you’ve hit on the argument or concern stated by employers not that interested in the arbitration or ADR option. While that’s a legitimate concern and while each employer must decide what’s best for the business, there are a couple of arguments on the other side that I think are true.
First, arbitration is almost always less expensive than litigation. Second, it’s been my experience that when a lawyer representing the employee realizes that he/she is facing arbitration or the hoops of an ADR program, he/she becomes much more interested in talking in terms of a reasonsable settlement.
John, That’s an interesting experience you’ve had, but runs counter-intuitive to me. (Let me say at the outset that I am not an attorney, just an HR person with 30 years in profession. I don’t do arbitrations or litigation full-time, but have plenty of experience with them over the 30 years.) I would think an attorney for an aggrieved employee would prefer arbitration since they have a better likelihood of getting an academic for an arbitrator that is not versed in court precedence. On the other hand going to court would take a lot of time and expense, and might make the employee’s attorney more likely to reach a negotiated settlement at the court’s doorstep. (Maybe I’m over-analyzing this and the true answer is situational.)
All good points, Paul. If you have 30 years experience in the HR profession, you know as much about this as I do. And as I’m sure you will agree, professionals sometimes disagree.
Conventional wisdom for employment lawyers who represent employees/plaintiffs is that the most money can be made by trying a case in court before a jury. Of course, that assumes that you can get the case to the jury, which sometimes proves impossible.
Either way, it is, at the end of the day, pretty much a crapshoot.
I really appreciate your comments.