Daniel Murray, a full-time union organizer, signed a mandatory arbitration agreement as a condition of employment. The pact said arbitrators would be chosen from a list provided by his employer and that arbitrators wouldn't have the authority to "change or diminish any power, right or authority granted by the (employer)." In other words, if the decision of the arbitrator altered's authority, it could be ignored.
When Murray was fired, he sued, alleging race discrimination. An appeals court allowed the case to go to court despite an arbitration agreement. Reason: If the arbitration process gives employers full control over the choice and decisions of the arbitrators, it's a bogus agreement. The court called this stacking of the deck "unconscionable." (Murray v. United Food and Commercial Workers International Union, 4th Cir., No. 01-1602, 2002)
Although last year's big Supreme Court decision in Circuit City Stores Inc. v. Adams (YATL, May 2001) gave companies more freedom to require employees to settle disputes via arbitration, it didn't release employers from rules about the equity and administration of such pacts.
Advice: Pick a neutral party to resolve arbitrated disputes. Include a provision in your arbitration agreement that says a list of arbitrators will be obtained from the American Arbitration Association (www.adr.org) or some other unbiased group. Courts will shoot down arbitration pacts that show obvious favor to the employer's side.
Staff can't claim retaliation when required to sign pact
When an Alabama manufacturer revised its company handbook, it included a new arbitration policy that had to be signed as a condition of employment. Five employees argued that the agreement was illegal and refused to sign. They were fired. The five workers sued in federal court, alleging retaliation under Title VII, the Americans with Disabilities Act (ADA) and age-bias law.
To bring a retaliation claim, workers must show that they: 1) engaged in an act protected by law, such as filing a lawsuit; 2) suffered an adverse job action (firing, demotion); and 3) had a good-faith belief that the company engaged in an illegal employment practice.
While a lower court sided with the workers, a federal appeals court tossed out the suit. It said an employer's use of an arbitration agreement, even if it's poorly drawn and unenforceable, isn't an illegal employment practice under Title VII, the ADA or age-bias laws. So employees' refusal to sign isn't considered "protected conduct" for purposes of proving retaliation. (Weeks v. Harden Manufac-turing Corp., 11th Cir., No. 01-16638, 2002)
Advice: Breathe a bit easier, knowing that employees can't hit you with a retaliation lawsuit just for instituting a mandatory arbitration agreement. But remember that these pacts are only effective if their terms and conditions are enforceable. You'll avoid trouble at the front end (hiring) or back end (firing) by making sure your policy is well drafted and enforceable.
Get a free sample arbitration policy
For a closer look at arbitration and mediation policies, including a sample policy, get a free copy of our three-page special report, Arbitrating Employee Disputes. To have the report e-mailed to you, send an e-mail request to YATLreport@nibm.net and be sure to put "Arbitration" in the subject line.
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