On April 1, 2009, in a victory for unionized employers, the Supreme Court upheld an arbitration clause in a collective bargaining agreement (CBA) requiring employees to arbitrate ADEA claims. In 14 Penn Plaza v. Pyett, the Supreme Court resolved a split in the circuit courts regarding whether employees subject to a CBA could be forced to arbitrate discrimination claims. 556 U.S. ___ (2009). Previously, many courts took the position that an arbitration clause in a CBA that required union members to arbitrate discrimination claims, including those under the ADEA, was unenforceable.
In 14 Penn Plaza, several unionized employees were reassigned to positions they deemed less desirable. According to the terms of the collective bargaining agreement, the employees filed grievances, claiming that the assignment was, among other things, an act of age discrimination. The union then requested arbitration, but after the first arbitration hearing, it withdrew the age discrimination claims. Later, the employees filed charges of age discrimination with the EEOC, and then filed their lawsuit in federal district court. The employer filed a motion to compel arbitration, which the district court denied. The Second Circuit upheld the decision, holding that the employees could not be required to arbitrate their federal statutory claims under the ADEA.
Reversing the Second Circuit, the Supreme Court first pointed out that the union and the employer had clearly and unmistakably agreed to arbitrate all discrimination claims. The Court noted that this was a "condition of employment," and thus subject to mandatory bargaining under the NLRA. The Court rejected the union's claim that the arbitration clause in the CBA was outside the permissible scope of the collective bargaining process because it affected the employee's "individual, non-economic statutory rights." Instead, the Court held that the arbitrability of discrimination claims is something the parties can agree to during the collective bargaining process. As such, courts should generally not interfere with that agreement. The Court found that unless the ADEA itself removed age discrimination claims from the realm of the "NLRA's broad sweep," the arbitration clause must be enforced. Finding no such prohibition in the ADEA, the court refused to strike down the arbitration clause. Instead, it held that because the clause was freely negotiated and clearly required the arbitration of the employees' ADEA claims, it was fully enforceable.
The Court cleared the confusion surrounding its prior holding in Alexander v. Gardner-Denver, Inc., 415 U.S. 36 (1974), and the progeny of cases that followed. It clarified that the arbitration clause in Gardner-Denver did not expressly cover the arbitration of statutory claims, like discrimination claims. Even so, the case's narrow holding and broad dicta had been used for decades to strike down arbitration clauses that included discrimination claims. The Court recognized its own softened view of arbitration as an appropriate and desirable forum for the resolution of a wide variety of disputes, and noted that discrimination claims are among those that may be arbitrated.
Employers with unionized workforces should take relief in knowing that employees' claims of discrimination can be resolved in arbitration. If the applicable CBA clearly and unmistakably includes claims of discrimination in the list of claims subject to arbitration, an employer cannot be forced to litigate those claims in court. Employers should consider taking steps to expand their CBA arbitration clauses as quickly as possible.