Employers Can Force Arbitration of Discrimination Claims,
If Collective Bargaining Agreement Is Clear

On April 1, 2009, the Supreme Court of the United States resolved the uncertainty about the enforceability of arbitration provisions in collective bargaining agreements when an employee brings an individual discrimination claims. The Court held that a collective bargaining agreement that "clearly and unmistakably" requires employees to arbitrate claims under the Age Discrimination in Employment Act (ADEA) is enforceable. See 14 Penn Plaza LLC v. Pyett, U.S., No. 07-581, 4/1/09. Based on this decision, employers may now enforce certain, specific arbitration provisions in a collective bargaining agreement when an employee alleges age discrimination, or other forms of discrimination. In other words, the employer can require that the employee use the arbitration procedure in the agreement if the language specifically covers these statutory discrimination claims, rather than seeking relief from a court.

In 14 Penn Plaza, a group of night lobby watchmen in a New York office building owned and operated by 14 Penn Plaza were directly employed by Temco Service Industries (Temco), a maintenance service and cleaning contractor. In August 2003, with the union's consent, 14 Penn Plaza engaged Spartan Security, a unionized security services contractor and affiliate of Temco, to provide licensed security guards to staff the lobby and entrances of its building. As a result, the watchmen were reassigned to jobs as night porters and light duty cleaners. The employees claimed that the reassignment resulted in emotional distress and loss in income and that the reassignments were less desirable than their former positions.

The union filed grievances challenging the reassignments. The union declined, however, to pursue grievances alleging that the company discriminated against the employees based on their age because the union had consented to the contract for new security personnel at 14 Penn Plaza. After filing a charge of discrimination with the Equal Employment Opportunity Commission (EEOC), the employees filed a lawsuit in the U.S. District Court for the Southern District of New York alleging their reassignments violated the ADEA and state and local laws prohibiting age discrimination. The defendants asked the court to compel arbitration pursuant to the collective bargaining agreement. The district court denied the defendants' motion to compel arbitration, and the Second Circuit (the appellate court covering the district courts in Vermont, New York, and Connecticut) agreed.

The Supreme Court reversed the decision by the court of appeals, stating that the National Labor Relations Act (NLRA) makes collective bargaining agreements and arbitration provisions enforceable, and that nothing in the text of the ADEA prohibits arbitration of discrimination claims. Notably, the collective bargaining agreement specifically prohibited discrimination against employees, citing a number of federal and state laws including the ADEA, and provided that "[a]ll such claims" were subject to arbitration under the agreement "as the sole and exclusive remedy for violations." The agreement also provided that "[a]rbitrators shall apply appropriate law in rendering decisions based upon claims of discrimination." The collective bargaining agreement was freely negotiated and "clearly and unmistakably" required the employees to arbitrate the statutory age-discrimination claims at issue. Thus, the Court concluded that the arbitration provision in the agreement could be enforced.

In light of the Court's decision, your employees may now be bound to the agreement of their union to arbitrate discrimination claims. You may now be able to enforce such arbitration provisions as long as the collective bargaining agreement clearly and unmistakably requires arbitration of these specific statutory discrimination claims. Proper drafting of these provisions will be important if you want to enforce the arbitration provision. If you would like to discuss the enforceability of arbitration provisions in a collective bargaining agreement against claims of discrimination, please contact Tami Earnhart, Lindsay Ramsey, or any member of our Labor and Employment Practice Group.

This publication is intended for general information purposes only and does not and is not intended to constitute legal advice. The reader must consult with legal counsel to determine how laws or decisions discussed herein apply to the reader's specific circumstances.