Skip to Main Content

Keeping you informed

USERRA Claims Subject to Arbitration Agreement

    Client Alerts
  • August 22, 2008

In its Gilmer case, the U.S. Supreme Court concluded that employment claims are subject to mandatory arbitration provisions in employment agreements in the absence of clear indications in those laws that such claims are not subject to arbitration.  Earlier this month, the Sixth Circuit Court of Appeals agreed with most other federal appellate courts that Gilmer’s reasoning extends to claims of discrimination brought under the Uniformed Services Employment and Reemployment Rights Act (USERRA).  In Landis v. Pinnacle Eye Care, LLC, the plaintiff was an optometrist who was called with his National Guard unit to serve in Afghanistan.  He alleged that his employer demoted and threatened to terminate him if he was recalled to active military service.

When sued, the employer obtained dismissal, citing a mandatory arbitration clause in the plaintiff’s employment agreement.  The plaintiff appealed, contending that USERRA claims are not subject to mandatory arbitration.  In support of his argument, the plaintiff cited language in USERRA’s legislative history indicating that claims under the Act were not intended to be bound by arbitration agreements.  The Sixth Circuit rejected this claim, relying on opinions from other federal courts finding USERRA claims subject to mandatory arbitration.  While conceding the language in the legislative history, the court concluded that Congress failed to follow up on these points by including any language in the statute itself that would prohibit arbitration of USERRA claims.

The decision to enter into mandatory arbitration clauses with employees is not easy.  Arbitration avoids court proceedings, but can subject employers to costs and decisions that can be less favorable than those achieved through litigation.  However, based upon Gilmer, federal courts will not exclude claims from arbitration in the absence of clear statutory guidance.