Arbitration Clauses Upheld,
Increasingly, employers are requiring their employees to sign arbitration agreements which mandate that any claims, including Title VII discrimination claims, be tried in front of arbitrators in a private arbitration setting, instead of before juries in civil court. While there are many requirements for such arbitration clauses to be enforceable (the same remedies must be available to the employee in arbitration as are available in court, e.g., punitive damages and attorney fees to the prevailing party, and there can be no added costs to the employee, such as being liable for the arbitrator’s fees), the reward for the employer can be significant, particularly if the employer is in a jurisdiction where juries are very unfriendly to corporations. Arbitrators, who are usually lawyers, and often are even retired judges, are more likely to rule based on the evidence and the law, whereas juries tend to be influenced by their emotions.
The United States Supreme Court, in 14 Penn Plaza LLC v. Pyett, Case No. 7-581 (April 1, 2009), has taken the arbitration concept one step further – allowing a union, as part of a collective bargaining agreement, to agree on behalf of all union members to arbitrate any claims of union members, including Title VII claims. Thus, employers with collective bargaining agreements can now negotiate for a provision that all union member claims, even statutory Title VII claims, be subject to binding arbitration.
Of course, for the arbitration provision to be enforceable, it must clearly and unmistakenably require the arbitration of statutory claims. Listing the statues for which claims under them are subject to the binding arbitration would be a good practice.
Before rushing to draft arbitration provisions, employers should consider three factors. First, while courts are free, arbitration is not. Arbitrators often charge $500.00 an hour or more. Second, the same key objective can be obtained by a jury waiver provision – the employee waives a right to trial by jury and agrees to a trial by a judge. Finally, Congress already has a bill before it to outlaw arbitration agreements for employees. While its fate is uncertain, the bill could well pass in this Democratic controlled Congress.
In other news, the federal government has extended, for a third time, the effective date of the E-Verify requirement for federal government contractors. The regulation is now set to take effect on June 30, 2009. The effective date is being delayed to give the Obama administration adequate opportunity to review the regulation, which was originally scheduled to be implemented on January 15, 2009. An official announcement of the delay was published in the Federal Register on Friday, April 17. Do not be surprised that this may not be the last delay. E-Verify has been subject to increasing criticism, for not catching many with fraudulent identification, and for having too many false positives – indicating someone can not be verified who is in fact legal.
Finally, just in time for the Swine Flue scare, the EEOC, in a recent informal opinion letter, opined that a health risk assessment (HRA), which an employer required as a condition of eligibility for its health plan, violates the American with Disabilities Act (ADA). As part of the HRA employees were required to fill out a short health-related questionnaire, take a blood pressure test, and give a blood sample for screening. The results of the test were given directly and exclusively to the employee, with the employer only receiving results in the aggregate. Employees who chose not to participate in the HRA (and their dependents) were ineligible for coverage under the employer’s health plan.
The EEOC noted that the ADA requires disability-related questions or medical examinations of employees to be job-related and consistent with business necessity, which the EEOC claimed the HRA was not, since it was not tied to any job duties. The EEOC distinguished the HRA from a wellness program, which typically does not violate the ADA as long as it is voluntary.
The argument against the EEOC’s position is that a HRA is needed for controlling health benefit costs, and thus it is related to the job (the costs of the job) and is a business necessity. Nevertheless, given the EEOC’s position, employers should proceed with caution.
By: Lawrence P. Postol
Vice President of Legislative Affairs
