In recent years, the U.S. Supreme Court has repeatedly upheld the validity of mandatory arbitration agreements between employers and employees. These agreements prohibit the parties from litigating employment claims in court. The Supreme Court has rejected challenges to arbitration agreements that allege that they are one-sided or that they frustrate the statutory goals of federal labor laws.
Last week in a 5–4 decision in 14 Penn Plaza LLC v. Pyett, the Court pushed this doctrine further, finding that individual union members are prohibited from litigating age discrimination claims when the collective bargaining agreement between the union and the employer provides for arbitration. In this case, the union initially filed a grievance on behalf of the employees, but later withdrew it, agreeing that the alleged discriminatory steps taken by the employer were mandated under the terms of the CBA.
When the individual employees filed suit under ADEA, the employer sought dismissal, claiming that their claims were subject to mandatory arbitration under the CBA. The Supreme Court agreed, concluding that the union-bargained terms included a preclusion of litigation by individual members. This provision was freely negotiated by the union, presumably in return for other terms favorable to its membership. The Court reiterated its belief that arbitration provides a full and fair forum for resolution of employment discrimination claims.
Unionized employers may want to consider seeking mandatory arbitration agreements in the next round of collective bargaining. These agreements are especially useful in parts of the U.S. where courts and juries return abusive verdicts in employment cases.