Agreements Can Force Discrimination Arbitration, High Court Rules

April 2, 2009
In a decision that could curb the growth of employment discrimination litigation, the Supreme Court has ruled that employees cannot take their claims to court if a collective bargaining agreement mandates that they go through arbitration.

The court overturned a decision by the 2nd Circuit Court of Appeals in New York that would have allowed workers for a real estate security contractor to file age discrimination charges against their employer after their union declined to pursue arbitration.

“We hold that a collective-bargaining agreement that clearly and unmistakably requires union members to arbitrate [age discrimination] claims is enforceable as a matter of federal law,” wrote Justice Clarence Thomas for the 5-4 majority on Wednesday, April 1.

The case involves employees of Temco Services Industries, a contractor that works in New York City buildings owned by the Pennsylvania Building Co. and 14 Penn Plaza LLC.

They were covered by the collective bargaining agreement between the Service Employees International Union and the multiemployer association of the New York City real estate industry that requires arbitration for discrimination claims.

Several of the Temco workers allege their jobs as night watchmen were taken away and they were reassigned to less desirable positions in August 2003 when Temco contracted with Spartan Security. They said that they were the only people on staff above the age of 50 and filed an age discrimination grievance.

A district court and the appeals court denied the employer’s motion to compel arbitration. The Supreme Court overruled and sent the case back to the lower court.

Jay Waks, chair of the employment and labor law group at Kaye Scholer in New York, characterized the decision as “landmark.”

“The ruling gives employers the ability to raise with unions in collective bargaining the concept of channeling discrimination claims to arbitration,” Waks said.

Such a process could reduce the number of employment cases that are rapidly filling the dockets of courts across the nation.

Paul Salvatore, co-chair of the labor and employment law department at Proskauer Rose, said that “arbitration is validated and vindicated in the unionized sector.”

Salvatore, who argued 14 Penn Plaza’s side in front of the Supreme Court, said the outcome of the case is a win for workers because it saves them time and money in legal expenses.

“Employees can go to one forum and have all their claims heard,” he said.

But the Supreme Court minority says the decision denies workers their day in court.

Writing on behalf of the four dissenters, Justice David Souter asserted that a 1974 Supreme Court decision in the case of Alexander v. Gardner-Denver Co. establishes that collective bargaining agreements cannot abrogate federal discrimination laws.

“In sum, Gardner-Denver held that an individual’s statutory right of freedom from discrimination and access to court for enforcement were beyond a union’s power to waive,” Souter wrote.

But Thomas argued that the 1974 decision was misguided.

“The court in Gardner-Denver erroneously assumed that an agreement to submit statutory discrimination claims to arbitration was tantamount to a waiver of those rights,” Thomas wrote.

Waks doubts that the Supreme Court’s ruling will spur a great number of companies and unions to agree to arbitration for employment discrimination claims.

“Its practical effect will be very narrow,” he said.

In the current economic climate, the sides can find themselves negotiating bigger issues more directly related to the company’s survival.

The case is 14 Penn Plaza LLC, et. al. v. Pyett, et. al., Docket No. 07-581.

—Mark Schoeff Jr.

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