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No mandatory arbitration agreement if EEOC case is pending

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in Employment Law,Firing,Human Resources,Leaders & Managers,People Management

If, like many employers, you require arbitration to settle employment disputes instead of allowing costly court fights, be aware of a new danger. The 11th Circuit Court of Appeals, which covers Florida employers, recently upheld a large punitive-damages award. In doing so, the court clarified that an employee’s refusal to sign an arbitration agreement when he already has a pending EEOC complaint is protected activity. Firing such an employee for refusing to sign is retaliation.

Recent case: Greg Goldsmith, who is black, worked for Bagby Elevator as a fabricator. He reported that a supervisor regularly used racial slurs, but to no avail. Company representatives told him “that’s just the way” his supervisor was, and that Goldsmith was “just going to have to accept it.”

Goldsmith didn’t want to accept it. He filed an EEOC complaint alleging he was forced to work in a racially hostile environment.

That’s when the company passed around its new dispute resolution agreement, which included an agreement to arbitrate all “past, present, and future” claims against it.

Goldsmith refused to sign unless the agreement was modified to apply only to future claims. That’s when Bagby fired him. So Goldsmith added retaliation to his claims. A jury awarded him $50,000 in back pay, $500,000 in punitive damages and $150,000 in attorneys’ fees. Bagby Elevator appealed.

The 11th Circuit Court of Appeals upheld the jury verdict. It reasoned that Goldsmith was fired for refusing to sign the arbitration agreement that would have forced him to abandon his EEOC complaint. By refusing to sign, he was engaging in protected activity—that is, he was protecting his right to pursue an EEOC complaint. He was therefore fired in retaliation for engaging in protected activity. (Goldsmith v. Bagby Elevator, No. 06-14440, 11th Cir., 2008)

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