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Recent Supreme Court Decision Supports Mandatory Arbitration of Discrimination Claims

In April, the United States Supreme Court decided that a mandatory arbitration clause in a Collective Bargaining Agreement (“CBA”) between an employer and a union which “clearly and unmistakably” requires arbitration of certain claims, including civil rights claims, was enforceable as a matter of federal law. This case, 14 Penn Plaza LLC v. Pyett, 555 U.S. __ (2009), could potentially open the door for the enforcement of mandatory arbitration clauses in non-union employment contracts as well.

The arbitration clause at issue required employees to arbitrate federal age discrimination claims. Before this case, employees often arbitrated a claim as required by their CBA, but would later also file a federal lawsuit based on the same alleged discriminatory practice or occurrence. In essence, an employee would have two different opportunities to bring the same claim against his or her employer, even if the CBA clearly stated that such claims were required to be arbitrated. This case is viewed as a victory for employers because it essentially says that: (1) employers can have mandatory arbitration clauses in their CBA and (2) a mandatory, enforceable arbitration clause covering federal age discrimination claims can prevent an employee from later bringing a lawsuit in federal court alleging the same discrimination.

Not only could this decision make it easier for unionized employers to require the arbitration of federal discrimination claims, it could also make it easier for a non-unionized employer to require the same without the fear that it may still be sued in federal court for alleged discrimination. While the case specifically dealt with an age discrimination claim, there is nothing in the case that suggests other types of federally prohibited employment discrimination such as race, sex, and disability could not be subject to mandatory arbitration as well.

This decision could prove to be good news for many employers. Arbitration is often a preferred method of dispute resolution because it is often more cost-effective, more efficient, and timelier than litigation. It is also beneficial for employers because the proceedings are private and not subject to the scrutiny of the press or public.

Please contact one of the attorneys in the labor and employment group at Bingham McHale if you would like to explore this option for your business.



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