EEOC Abandons Policy Against Mandatory Arbitration for Employment Disputes

Lisa Nagele-Piazza, J.D., SHRM-SCP By Lisa Nagele-Piazza, J.D., SHRM-SCP December 20, 2019
EEOC Abandons Policy Against Mandatory Arbitration for Employment Disputes

In light of Supreme Court decisions favoring arbitration, the U.S. Equal Employment Opportunity Commission (EEOC) is scrapping its longstanding policy against the use of mandatory, pre-dispute arbitration agreements for employment-related claims.

The EEOC enforces federal laws that prohibit employment discrimination, such as the Americans with Disabilities Act, Age Discrimination in Employment Act and Title VII of the Civil Rights Act of 1964. 

The agency issued its policy statement against mandatory, binding arbitration in 1997. Since then, the U.S. Supreme Court has held that such agreements are enforceable under the Federal Arbitration Act.

"Case law also now makes clear that the EEOC continues to be fully available to employees as an avenue to assert EEO rights and to investigate in the public interest, regardless of whether the parties have entered into an enforceable arbitration agreement," the agency said in a Dec. 16 statement.

We've rounded up resources and articles from SHRM Online and other trusted outlets on the news.

Agreements Scrutinized After #MeToo Movement

In 1997, the EEOC said that requiring workers to agree to mandatory, binding arbitration as a condition of employment can "harm both the individual civil rights claimant and the public interest in eradicating discrimination." The two Republican EEOC members, Chair Janet Dhillon and Victoria Lipnic, voted to rescind the policy statement in light of recent precedent. Charlotte Burrows, the only Democratic commissioner, voted against the policy change. "I'm disappointed that the commission is rescinding our longstanding position, particularly given the commission's ongoing efforts to combat sexual and other forms of harassment in employment," she said. Following the #MeToo movement, worker advocates have criticized the use of arbitration agreements as a way to silence sexual-harassment victims and keep claims out of court.

(Bloomberg Law)

Evolving Case Law

The EEOC highlighted key Supreme Court decisions since that led to its change in position. For instance, in a 1991 case, the high court said that an arbitration agreement didn't bar an employee from filing a charge with the EEOC. In a 2002 case, the Supreme Court held that an employment arbitration agreement doesn't prevent the EEOC from pursuing "victim-specific relief" in court on behalf of an employee who filed a timely charge with the agency. The 1997 statement "does not reflect current law, is rescinded, and should not be relied upon by EEOC staff in investigations or litigation," the agency said. The EEOC also noted, "Nothing in this rescission should be construed to limit the ability of the commission or any other party to challenge the enforceability of a particular arbitration agreement."


Significance of the EEOC's Position

Although policy documents are not legally binding, they are often used as guidance by courts, investigators, state agencies and attorneys. They also shed light on how the agency will handle the situations it is asked to resolve. But the decision to rescind the 1997 policy statement probably won't change much. Judges likely already viewed the position as outdated, particularly when compared with the many court decisions that have upheld mandatory pre-dispute arbitration agreements.

(Fisher Phillips)

Should Harassment Claims Be Arbitrated?

Proponents of mandatory arbitration say it's speedy, fair, inexpensive and less adversarial than litigation in court. Employers and workers may benefit from the fact that the filings and testimony in arbitration are not in the public record, though they are made public in court. However, litigating harassment claims in court may have advantages for employers. For example, courts may be more receptive than arbitrators to employer defenses in harassment claims, and not requiring harassment claims to be settled through arbitration avoids #MeToo objections to arbitration policies.

(SHRM Online

Consult State Laws on Arbitration

Although the Supreme Court has made clear that employment arbitration agreements are allowed, employers must be sure to carefully draft such agreements so they don't run afoul of state-law requirements. In California, for example, agreements can't limit the remedies that would otherwise be available to employees in court, and the employer must pay for any arbitration costs that go beyond what the employee would be expected to pay in court.

(SHRM Online)



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