Wednesday, September 04, 2002

arbitration as a condition of employment Thanks very much, Howard, for asking my opinion on the Ninth Circuit's decision (pdf) yesterday, holding that an employer can lawfully refuse to hire a person because he or she refuses to sign an agreement that all claims -- including federal discrimination claims -- will be arbitrated rather than litigated in court. I've touched on the topic tangentially before, but here's my answer: (1) The decision was probably correct -- which is not to say that the law should be that way, but that this decision makes the best sense of the applicable Supreme Court precedents and statutory language; (2) It's not so bad, really, even from a "what the law should be" perspective; and (3) (what else do you expect me to say) it highlights the need for LABOR ORGANIZATIONS!

First, the decision was legally correct. The Supreme Court -- like it or not -- has issued a series of opinions that expanded the reach of the Federal Arbitration Act, a statute making arbitration agreements enforceable even in states (like Alabama) that traditionally disfavor arbitration. Under these Supreme Court precedents, an agreement to arbitrate an employment-discrimination claim is pretty clearly enforceable if the provisions of the arbitration agreement are fair (see my earlier post touching on this issue). While the federal employment discrimination statutes could nonetheless be written so as to declare that claims under those statutes can't be forced to arbitration over an employee's objection, the language of the anti-discrimination statutes doesn't really so provide, to my eye. Or to many other people's eyes, apparently. Finally, though the federal anti-discrimination statutes also have anti-retaliation provisions -- such that employees can't be fired for doing things that they reasonably believe are protected by the anti-discrimination statutes (such as complaining about sex harassment, for instance) -- the Ninth Circuit's decision echoes the Eleventh Circuit's recent decision in holding that the anti-retaliation provisions provide no solace for a guy who was fired because he refused to agree to arbitration.

Second, is this such a bad thing? Not really, in my view. I recognize that my view is somewhat outside the mainstream, for lawyers who represent employees in discrimination cases; those lawyers tend to worry that arbitration will not be as friendly a forum as federal court. My view -- again assuming that the procedural aspects of the arbitration agreement are fair (i.e., no provisions making arbitration too expensive from the employee's point of view, or limiting discovery too strictly, or purporting to limit the remedies that the arbitrator can award, or stacking the arbitrator-picking process in the employer's favor) -- is that arbitration is one of the greatest things since sliced bread for employment-related disputes. Why do I believe this? Because that's been union-side gospel for fifty years, at least as to the resolution of disputes arising under collective bargaining agreements, and I'm fully convinced based on my experience that arbitration could also be good and fair for statutory discrimination cases. It's just a matter of developing a generation of arbitrators who are good and fair when handling these cases. Then, arbitration really can be a fair and inexpensive and speedy alternative to court -- and you may just find (as we often do in labor arbitrations) that arbitrators who spend day after day seeing how workplaces really function are somewhat more forgiving of employees' minor foibles and screwups than are federal judges, and more sensitive to unfairness and discrimination, and that this ends up making arbitration a more successful forum for plaintiffs.

Third, what do we need to do, in order to develop that level of fairness in the arbitration of employment-discrimination cases? The answer, as Joe Hill said, is "Don't mourn -- organize!" In the current climate, to call these arbitration provisions "agreements" is something of a sick joke; for the vast majority of unorganized employees, there's nothing remotely like a true negotiation and agreement of employment terms, so the employer imposes whatever terms it wants and you're fired if you don't say "thanks boss." This, I think, was the core insight that the dissent had, in the Ninth Circuit case, and the reason why I would perhaps rule for the employee on this issue if I were on the Supreme Court: that the FAA enforces only arbitration agreements, and these forced provisions aren't agreements in the freely-negotiated sense contemplated by that statute. But I'm not on the Supreme Court, and the folks on it won't buy this argument. So, again, don't mourn -- organize. If employees organize themselves and opt for union representation, then they will be able to do the two crucial things that will make arbitration work here: (1) they will be able to collectively bargain about how the arbitration system will work, such that it's fair (or even, if they want to, negotiate adamantly that they won't arbitrate statutory claims; and (2) they will let arbitrators know that the unions are large repeat players on the statutory-arbitration scene, giving arbitrators an incentive to be fair so that both sides will agree to their selection in future cases.

How about that for a long-winded answer to Howard's question? Now time's up -- or more precisely, my kid's up, and I got to go. Sam

posted by sam 7:17 AM 0 comments

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