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Here is how HR can help prevent the missteps that could cost your company big in court.
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A reservist employee fired after being called into active duty in Afghanistan had to arbitrate his Uniformed Services Employment and Reemployment Rights Act (USERRA) claim based on the arbitration clause in his employment agreement, the 9th U.S. Circuit Court of Appeals ruled.
Kevin Ziober served in the U.S. Navy Reserve and worked in his civilian life as an operations director for defendant BLB Resources Inc., a real estate marketing and management firm. Approximately six months after joining the company, Ziober signed a bilateral arbitration agreement. This agreement required arbitration of "any controversy, claim or dispute between Employee and the Company ... relating to or arising out of employee's employment or the cessation of that employment."
Ziober told the company that the Navy was recalling him to active duty in Afghanistan. On Ziober's last scheduled day of work, BLB informed him that he would not have a job upon his return to civilian life.
[SHRM members-only HR Q&A: Leave Benefits: Military: What is an employer's obligation under USERRA to return employees on military leave to work?]
After returning from Afghanistan, Ziober sued BLB in federal court for violating USERRA.
BLB moved to compel arbitration pursuant to Ziober's employment agreement, and the district court granted the motion. Ziober appealed, claiming that USERRA invalidated or superseded the arbitration agreement.
The 9th Circuit considered the long history of deference to arbitration in case law since the Federal Arbitration Act (FAA) was enacted in 1925. When USERRA was enacted in 1994, the FAA had been in effect for almost 70 years. The 9th Circuit reasoned that a federal statute could create a procedural right to sue in federal court that precludes a contractual agreement to arbitrate. To do so, however, Congress must expressly mention and forbid mandatory arbitration of such claims or state that the FAA does not apply to the statute. The court found that Congress had not done so under USERRA.
Ziober argued that USERRA states that it supersedes any "contract, agreement … that reduces, limits or eliminates in any manner any right or benefit provided by" the statute. In a House committee report, Congress interpreted this section to "reaffirm that additional resort to mechanisms such as grievance procedures or arbitration or similar administrative appeals is not required." Thus, he maintained, Congress intended that employers could not force employees to arbitrate USERRA claims.
The 9th Circuit disagreed with Ziober and found that this language was referring to union contracts and collective bargaining agreements that require an employee to take an additional step or exhaust grievance procedures before filing suit. Unlike a collective bargaining agreement, an individual arbitration agreement does not limit or delay the filing of a claim but requires it to be decided in a private arbitration setting rather than through public court litigation.
Ziober v. BLB Resources Inc., 9th Cir., No. 14-56374 (Oct. 14, 2016).
Professional Pointer: Despite multiple challenges from employees and agencies, arbitration agreements remain effective in preventing court litigation of many, if not most, employee claims, and employers should consider them as an option in addressing legal risks.
Jeffrey Rhodes is an attorney with Doumar Martin in Arlington, Va.
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