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Client Briefing from the Labor and Employment Group - April 2009

United States Supreme Court Upholds Arbitration Clause In Collective Bargaining Agreements For Age Discrimination Claims

By Patricia F. Weisberg

The U.S. Supreme Court released an opinion on April 1, 2009 holding that a collective bargaining agreement (“CBA”) that clearly and unmistakably requires union members to arbitrate claims under the Age Discrimination in Employment Act (“ADEA”) is enforceable as a matter of federal law.

The Decision

In 14 Penn Plaza, LLC, vs. Pyett, night watchmen and porters at a commercial office building in New York City alleged that their reassignment violated their CBA and federal age discrimination law. The employer moved to dismiss the claims or, in the alternative, to compel arbitration under the CBA. The U.S. Supreme Court found that the union and the employer had freely negotiated a CBA that expressly provided that employment-related discrimination claims, including ADEA claims, would be subject to mandatory arbitration. The CBA provision states in part:

§ 30  NO DISCRIMINATION.

There shall be no discrimination against any present or future employee by reason of race, creed, color, age, disability, national origin, sex, union membership, or any other characteristic protected by law, including, but not limited to, claims made pursuant to Title VII of the Civil Rights Act, The Americans with Disabilities Act, The Age Discrimination in Employment Act, The New York State Human Rights Law, The New York City Human Rights Code, . . . or any similar laws, rules, or regulations. All such claims shall be subject to the grievance and arbitration procedures (Articles V and VI) as the sole and exclusive remedy for violations. Arbitrators shall apply appropriate law in rendering decisions based upon claims of discrimination.

The court held that the provision was the subject of bargaining under the National Labor Relations Act (“NLRA”) and entitled to court deference unless the ADEA removed the claim from the NLRA’s broad sweep. The court concluded that the ADEA did not preclude arbitration of claims brought under the statute. As such, the Supreme Court held that “a collective bargaining agreement that clearly and unmistakably requires union members to arbitrate ADEA claims is enforceable as a matter of federal law. ”

What the Decision Means for Employers

The decision is good news for employers, particularly those with unionized workforces. When confronted with allegations of discrimination, employers often had to fight the allegations on at least two fronts - arbitration through the CBA and federal court. In addition to the significant administrative burden and costs associated with two distinct processes, it also allowed the employee two opportunities to have their claims heard, exposing employers to inconsistent results.

Now, with the Supreme Court determining that an arbitration clause in a CBA waiving employees’ right to file statutory discrimination claims can be enforceable, employers will generally be able to negotiate and enforce contract language requiring employees to bring federal discrimination claims under the grievance procedure of the CBA. This forum - as opposed to litigating in federal court - usually provides a more cost-effective and less risky arena to resolve employee discrimination claims. However, employers should be certain to carefully draft this mandatory arbitration language and be sure to enumerate in the CBA the statutes and claims that are subject to mandatory arbitration.

Should you have questions as to whether your current collective bargaining agreement may require arbitration of discrimination claims or, if you would like to discuss negotiating such language into your CBA, the Labor and Employment attorneys at Walter & Haverfield are available to assist you.

The information in this Client Advisory is a summary of often complex legal issues and may not cover all of the "fine points" of a specific situation or court jurisdiction. Accordingly, it is not intended to be legal advice, which should always be obtained in consultation with an attorney.