By Amy J. Zdravecky
June 4, 2009
Employers may now be able to avoid costly litigation by having discrimination claims handled through the arbitration proceedings of their union contracts. There are many advantages to having discrimination claims arbitrated, including lower cost, faster resolution and greater control over the decision-making process.
The Decision
On April 1, 2009, in 14 Penn Plaza LLC v. Pyett, the U.S. Supreme Court ruled that labor unions can waive their members’ rights to litigate discrimination claims by agreeing to arbitrate those claims under a union contract. Although this case involved only age-discrimination claims, it may also support agreements to arbitrate other employment claims. Congress may quickly act to amend employment discrimination statutes to prohibit such agreements and reverse the effect of the Court’s ruling. Until then, employers with union contracts should consider the benefits of arbitrating employment discrimination claims, making their agreements’ grievance and arbitration procedures the exclusive remedy for such claims.
The following are some of the benefits of arbitration and some of the best practices for negotiating these provisions into union contracts.
Arbitration Benefits
There are numerous advantages to arbitrating discrimination claims as the exclusive remedy. Arbitration is less costly and quicker than a court proceeding. Arbitration also avoids a trial by jury, which could base its decision on emotion instead of fact and second-guess an employer’s legitimate personnel decision. Arbitration also involves sharing information between the parties in a more sensible, controlled way, avoiding burdensome, expensive lawsuit discovery. Also, arbitration decisions are usually “final and binding” on all parties, avoiding further costs and delays of appeals. Arbitration remedies do not normally include punitive damages, attorneys’ fees or other add-ons to normal back pay. Finally, arbitration, as the sole and exclusive remedy, avoids the necessity of litigating discrimination claims in multiple forums - which could include arbitration, agency proceedings, and court proceedings - requiring the employer to win at each forum.
Negotiating Contract Provisions to Arbitrate Discrimination Claims
First, include in your contract a provision barring discrimination. Propose clear, precise language stating that all discrimination claims are subject to the grievance and arbitration process “as the sole and exclusive remedy for violations.” Include a provision instructing the arbitrator to apply appropriate state, federal or local law in rendering decisions based upon claims of discrimination. Then, inform the union that (a) since such claims are subject to the grievance and arbitration procedures of the contract, just like any other alleged breach of the agreement, and (b) since the contract has a provision prohibiting discrimination, then it is in everyone’s interest to make the grievance and arbitration procedure the exclusive route to resolving these claims. Otherwise, if the employer may be sued anyway, there is little likelihood that the claim will get resolved in the grievance procedure. And, if the employer is sued, the union may also be a defendant in a suit, either for discrimination and/or failure to fairly represent the member if it refuses to take the claim to arbitration, and it could be substantially more expensive (and potentially more embarrassing) for the union if it has to defend a discrimination and/or duty of fair representation claim in court, instead of an arbitration proceeding. Explain to the union that, if the exclusive remedy is arbitration, there is far more likelihood that the claim will be resolved-one way or another-in the informality of the grievance procedure or, at least, in the less costly and less time-consuming arbitration procedure.
If that does not persuade the union to accept the proposal, the employer might consider proposing that the grievant could ask the arbitrator for any remedy they could seek in court (including, perhaps, punitive damages and attorneys fees, in which case, the union could recover the cost of representing the employee). While this gives back some of the monetary gains, it still avoids the cost and delay of litigation and the uncertainty of a jury trial. Finally, once the provision is agreed to, have the union explain the provision and the benefits of arbitrating such claims to its membership to ensure that members use the grievance and arbitration procedures to resolve any alleged discrimination claims.
Amy J. Zdravecky is a partner in Neal Gerber Eisenberg’s Labor & Employment Practice Group in Chicago. She engages in all areas of traditional labor and employment law, and has represented clients before state and federal courts and numerous administrative agencies, such as the Equal Opportunity Commission and state equal employment opportunity commissions. She can be reached at [email protected].
