Member Article

On Monday, January 14, 2002, the United States Supreme Court decided 6-3 that the EEOC is not limited by an arbitration agreement signed by an individual employee, but may seek back-pay, reinstatement or damages on behalf of that employee when it litigates. The lower appellate courts had split, with the most arbitration favorable courts holding that where an arbitration agreement existed, the EEOC was limited to seeking injunctive relief. The majority opinion dismissed warnings by the dissenting Justice Thomas that the ruling would discourage the use of arbitration agreements by noting that in 2000 the EEOC brought only 291 law suits and intervened in 111 more, suing in less than 1% of the charges filed per year. This case was the simplest possible. The employee never sought arbitration nor had he intervened. The Court noted that the employer itself could have compelled arbitration under the Federal Arbitration Act, but had not. The impact of an arbitration decision or a settlement on the relief that could ultimately be obtained by the EEOC remains an open question. For Justice Thomas, those possibilities raise the specter of an employee getting two bites at the apple, first in arbitration and again in the EEOC litigation, placing employers with arbitration agreements at a disadvantage. Given the Court’s long standing recognition of the EEOC’s special role in enforcing civil rights laws, the decision is not surprising, and does little to alter the law from what most employers anticipated it would be when they implemented arbitration programs. At a minimum the decision heightens the scrutiny on which cases the Commission will choose to litigate. Based on its prior opposition to pre-dispute arbitration agreements, it can be anticipated that the Commission will focus its limited resources on those cases where such agreements exist. Although it may be touted as a victory for the anti-arbitration forces, the bigger story may well be the continued validation of arbitration as an alternative for resolving work place disputes, with the battles now being fought only on the margins. If you have any questions regarding these or any other employment law issues please feel free to contact one of the authors listed at the top of the page.

 

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