Labor and Employment Law Alert - Supreme Court: Arbitration Provisions in Collective Bargaining Agreements Enforceable on Discrimination Claims
4/1/2009

In 1991, the U.S. Supreme Court ruled in Gilmer v. Interstate/Johnson Lane Corp. that individual employees who sign arbitration agreements could be compelled to arbitrate all claims against their employer, including statutory discrimination claims. Today, the Supreme Court extended that ruling to the union workplace, holding that union members can be required to arbitrate all claims including statutory discrimination claims through the grievance and arbitration procedures if their union agrees to do so in a collective bargaining agreement (CBA).

In 14 Penn Plaza LLC v. Pyett, union members filed suit in federal court asserting claims against their employer under the Age Discrimination in Employment Act (ADEA). The employer moved to dismiss the union members' suits on the basis that the CBA required union members to submit any discrimination claims to binding arbitration. The trial court denied those motions, and the Second Circuit Court of Appeals affirmed, relying on a long line of cases holding that union members cannot be required through a CBA to waive the right to a jury trial on statutory discrimination claims.

In today's 5-4 decision, the Supreme Court held that a CBA provision clearly and unmistakably required union members to arbitrate ADEA and other discrimination claims and was enforceable as a matter of federal law. The court emphasized that arbitration is an adequate means to resolve statutory discrimination claims as well as alleged contract violations.

This outcome is important for union employers, as union arbitration is generally a more cost-effective and expedient method of resolution, especially if all claims are addressed in one forum. If your CBA does not contain an exclusive remedy provision that includes statutory claims, you should consider proposing such a provision in your next union contract negotiations. For nonunion employers, this case serves as a reminder that properly crafted predispute arbitration agreements that include statutory discrimination claims are enforceable and may be a preferable alternative to litigation in state or federal court.