May 2009
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. 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 Supreme Court 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 the 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 Union to arbitrate an age discrimination claim rather than dealing with a charge of age discrimination from the Equal Employment Opportunity Commission and future litigation.
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 their age. The Union withdrew its request because they agreed to allow the company to enter into a new contract for services that caused the reassignment of the aggrieved employees. The aggrieved employees filed an EEOC charge claiming age discrimination. Once the EEOC issued a right to sue letter the employees filed a lawsuit in Federal District Court. The employer tried to compel arbitration of the employees’ age discrimination claims, however, the District Court and the Appellate Court held that another Supreme Court case forbids enforcement of collective bargaining provisions requiring arbitration of ADEA claims. Prior to 14 Penn Plaza, Courts of Appeals were divided on the issue of whether a clear and unmistakable waiver of statutory rights is enforceable. Some courts held a collective bargaining agreement could not waive covered workers’ rights to a judicial forum for causes of action created by Congress and other courts held the opposite. As a result of this divide, the Supreme Court in 14 Penn Plaza, agreed to decide the issue.
In 14 Penn Plaza, two federal laws were at issue: the National Labor Relations Act (NLRA) and the Age Discrimination and Employment Act (ADEA). The Supreme Court reasoned that courts generally may not interfere with a bargained-for exchange in the collective bargaining context, rights guaranteed under the NLRA, and thus held that 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 the ADEA does not preclude arbitration of claims brought under the ADEA. The Supreme Court specifically reasoned that when the parties collectively bargain in good faith and agree that employment-related discrimination claims, including claims brought under the ADEA, 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.
With this most recent Supreme Court decision, it is safe for employers to negotiate arbitration clauses that require a union and employees to remedy any claim of age discrimination in arbitration rather than in litigation which is significantly more costly and can take many years to resolve. It is important to note that the basis of this obligation must be a clearly written arbitration clause that creates no doubt as to what statutory rights are specifically waived. Going forward, employers with current 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 renewal negotiations. This is good news for any employer seeking to maximize the efficiency of resolving disputes and seeking to minimize its exposure to litigation and future liability.
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