U.S. Supreme Court allows mandatory arbitration of age claims. Talk to your unions and avoid the costs and uncertainty of endless employment litigation.
Editor’s comment: We consider this a major development all risk managers should be aware of, even in union settings. Arbitration clauses in collective bargaining agreements can serve a greater purpose than the traditional resolution of contractual disputes arising from the terms of the collective bargaining agreement in grievance hearings. Now, U.S. employers may utilize arbitration clauses to expressly require resolution of statutory disputes, such as claims of age discrimination arising out of the Age Discrimination and Employment Act (ADEA). In a recent decision, 14 Penn Plaza LLC v. Pyett et. al., (No. 07-581 April 1, 2009), the Supreme Court upheld an arbitration clause that specifically mandated arbitration of any age discrimination claim and ruled that such arbitration clauses are enforceable as a matter of federal law. In other words, an employer can legally obligate the employee and their union to arbitrate an age discrimination claim rather than dealing with a charge of age discrimination from the Equal Employment Opportunity Commission, Illinois Department of Human Rights along with related litigation with flows from the administrative agencies.
It has been our experience most employment law claims are inherently anti-employer. You can fight even a bona fide claim and be forced to pay high defense fees to your typical employment-law defense firms who charge $400-800 per hour in handling them. In contrast, Keefe, Campbell & Associates charge less than $200 per hour to fight such matters. Even with more reasonable defense fees, you still may be looking at paying double-fees if Plaintiff prevails and even gets $1 from a jury! Our vote is to try to end the possibility of such litigation at the earliest opportunity.
In 14 Penn Plaza, the Service Employees International Union withdrew its request to arbitrate a grievance alleging age discrimination on behalf of employees that had been reassigned to less desirable positions, allegedly on the basis of age. The union withdrew its request because they agreed to allow the company to enter into a new contract for services that caused reassignment of the aggrieved employees. The aggrieved employees later filed an EEOC charge claiming age discrimination. Once the EEOC issued a “right to sue” letter the employees filed suit in Federal Court. The employer tried to compel arbitration of the employees’ age discrimination claims, however, the District Court and the Federal Court of Appeals ruled another Supreme Court case forbids enforcement of collective bargaining provisions requiring arbitration of ADEA claims. Prior to 14 Penn Plaza, the respective Courts of Appeals were divided on the issue of whether a clear waiver of statutory rights was legally enforceable. Some courts held a collective bargaining agreement could not waive covered rights to a judicial forum for causes of action created by Congress and other courts held the opposite. As a result of this dichotomy in the Courts of Appeals below, the U.S. Supreme Court in 14 Penn Plaza, accepted the case and agreed to decide the issue.
In this claim, two federal laws were at issue: the National Labor Relations Act and the Age Discrimination and Employment Act. The Supreme Court reasoned courts generally may not interfere with a bargained-for exchange in the collective bargaining context, rights guaranteed under the NLRA, and thus held the collective bargaining agreement’s arbitration provision must be honored unless the ADEA itself removes this particular class of grievances from the NLRA’s broad sweep. The Court reasoned ADEA does not preclude arbitration of claims brought under the ADEA. The Supreme Court specifically reasoned when the parties collectively bargain in good faith and agree employment-related discrimination claims are to be resolved in arbitration, this agreement constitutes a clear and unmistakable waiver of the employee’s right to pursue rights created by statute and thus is enforceable.
We again urge U.S. employers to avoid unnecessary litigation and concomitant costs and negotiate arbitration clauses that require your union(s) and employees to remedy any claim of age discrimination in arbitration. The basis of this obligation must be a clearly written arbitration clause that which outlines precisely which statutory rights are specifically waived. Employers with collective bargaining agreements should review the arbitration language and consider the feasibility of negotiating a modification or propose a change in the language during contract renewals.
Please forward your thoughts and comments on this new ruling.
