April 3, 2009
Articles
Supreme Court Enforces Labor Agreement
Mandating Arbitration of Employment Discrimination Claims
On April 1st, the United States Supreme Court issued an important decision that resolves key issues concerning the enforceability of arbitration clauses in labor agreements. (14 Penn Plaza LLC v. Pyett, U.S. No. 07-581, 4-1-09) In its 5-4 decision, the court majority ruled that a provision in a labor agreement that “clearly and unmistakably” required employees to arbitrate any claims under the Age Discrimination in Employment Act was enforceable as a matter of federal labor law.
The case arose when the employer reassigned several employees working as night watchmen to less desirable positions as “porters,” and “cleaners.” The affected employees filed grievances under the labor agreement, but their union declined to pursue that portion of their grievances which alleged that the employer had engaged in age discrimination. Eventually, the employees filed a lawsuit in Federal District Court, alleging violation of federal and state laws prohibiting age discrimination in employment.
In response, the employer sought to enforce the arbitration provisions of the labor agreement. That agreement broadly prohibited discrimination against employees, and specifically referenced a number of federal and state discrimination laws, including the Age Discrimination in Employment Act. The collective bargaining agreement specifically stated that all claims involving an alleged violation of those statutes were subject to arbitration under the agreement “. . . as the sole and exclusive remedy for violations.”
The court majority reasoned that a provision in a collective bargaining agreement calling for the arbitration of discrimination disputes must be enforced like any other provision of a labor agreement, unless the specific discrimination statute at issue prohibits the arbitration of such a claim. The Age Discrimination in Employment Act has no such provision. Secondly, the majority noted that the court had previously upheld similar arbitration agreements entered into between an employer and a single employee. The majority concluded that there was no legal basis to draw distinctions between an agreement between an employer and a single employee, and one that is negotiated by the exclusive bargaining representative of employees.
This decision has significant implications for employers that are party to a collective bargaining agreement. When faced with the potential for lengthy proceedings before a court, many employers would prefer discrimination claims to be resolved through the more expedient process of arbitration. Such an employer should approach future contract negotiations with a clear understanding of what contract language will be sufficient to bind employees to arbitrate claims of discrimination, as well as the likely strategic issues that will be presented during collective bargaining negotiations over such a proposal.
For advice on this significant development, please contact one of our Labor & Employment attorneys.
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Felhaber, Larson, Fenlon & Vogt, P.A. |
Felhaber, Larson, Fenlon & Vogt, P.A. |
www.felhaber.com |
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