The Issue with Arbitration

Last week, The Employee Rights Advocacy Institute for Law and Policy published a paper entitled “The Widespread Use of Workplace Arbitration Among America’s Top 100 Companies”.  The research was aimed at discovering how prevalent, and therefore limiting, arbitration agreements are for individuals employed by America’s largest companies. Professor Imre Szalai of the Loyola New Orleans College of Law, who authored the paper, determined that arbitration agreements are both commonplace and extremely limiting to employees.

Many companies impose certain restrictions on its employees by various means such as company policies and employment contracts.  Professor Szalai found that, among the Fortune 100 companies studied, 80 of them have used arbitration agreements in connection with workplace-related disputes since 2010.

In the event of workplace misconduct, arbitration agreements limit a person’s ability to bring his or her claim in court.  Often, these agreements set out a procedure for handling these disputes.  There are various versions of these procedures, but they generally set out a course for an investigation and determination, possibly followed by an opportunity for appeal.  Finally, there is always a clause forcing arbitration in the event that the issue isn’t resolved.  This means that a person’s ability to bring a claim in a court of general jurisdiction is limited.  In general, the decision made by the neutral arbitrator is final.

This is an issue that I run across from time to time. An individual who has an excellent case is barred from bringing a charge of discrimination or a petition for damages because he or she must see the case through the procedure set forth by its employer.

In sum, it is always a good idea to be aware of your company’s policies.  Even though you likely have no choice about whether or not to agree, knowing what your up against can influence how you move forward when put in a difficult situation.

Supreme Court to Determine Enforceability of Class Action Waivers

A few weeks ago, the U.S. Supreme Court consolidated and granted review of the following cases:

National Labor Relations Board v. Murphy Oil USA, Inc.;

Epic Systems Corp. v. Lewis;

Ernst & Young LLP v. Morris.

All three of these cases address whether class action waivers contained in arbitration agreements are enforceable.  Currently, the law is split, as the three cases above contain rulings that are inconsistent with each other.

There are a few interesting practical notes on this matter:

  • The NLRB consists of five board members, two of which are currently vacant. The two remaining vacancies will be filled by Presidential appointment. But, we are unsure about when President Trump will do so. In addition, President Trump will have the opportunity to appoint a new NLRB General Counsel in November 2017 when Richard Griffin’s term expires. Therefore, the tone of the NLRB rulings, which have consistently invalidated such waivers since 2012, may soon change. Therefore, the need for a clear ruling on this matter by the U.S. Supreme Court cannot come soon enough.
  • However, many experts are predicting that this issue, if heard by the current justices of the Supreme Court, would result in a 4-4 tie. Therefore, the timing of appointment and confirmation of a ninth justice may be very instrumental for this issue. The date for this matter’s oral argument has not yet been set. Ideally, the matter isn’t heard until a ninth justice has been confirmed, eliminating the potential for further confusion.

What does all of this mean? It means that the employers and employees encumbered by employment contracts need to consult with counsel more than ever. What is enforceable today may no longer be enforceable in the very near future. Failure to pay attention to these developments could result in an unnecessary need for re-drafting of applicable agreements, or missing out on an opportunity to collectively bring suit to enforce legal rights.

At Schaeffer Law, we keep up with changes in legal nuances and updates to the law.  We encourage everyone to have us look at his or her employment contract before it is signed.  This includes anything from confidentiality agreements and employment releases to non-competes and severance agreements.  We know what to look for and can review these quickly and reasonably, potentially saving clients from making a very expensive mistake.  Contact us if you need counsel.