More on the EEOC’s Rescission of its Anti-Arbitration Policy
Posted on Categories Arbitration Agreements, Business & Employment, Non-Securities Arbitration, RegulationTags , ,

By George H. Friedman, SAA Editor-in-Chief

As reported in SAA 2019-48 (Dec. 18), the EEOC has formally rescinded a Clinton-era policy against mandatory arbitration of workplace discrimination claims. Here are more details.

The Commission in 1997 issued a policy statement, Policy Statement on Mandatory Binding Arbitration of Employment Discrimination Disputes as a Condition of Employment, stating: “The United States Equal Employment Opportunity Commission (EEOC or Commission), the federal agency charged with the interpretation and enforcement of this nation’s employment discrimination laws, has taken the position that agreements that mandate binding arbitration of discrimination claims as a condition of employment are contrary to the fundamental principles evinced in these laws…. The use of unilaterally imposed agreements mandating binding arbitration of employment discrimination disputes as a condition of employment harms both the individual civil rights claimant and the public interest in eradicating discrimination. Those whom the law seeks to regulate should not be permitted to exempt themselves from federal enforcement of civil rights laws. Nor should they be permitted to deprive civil rights claimants of the choice to vindicate their statutory rights in the courts -- an avenue of redress determined by Congress to be essential to enforcement” (Policy no. 915.002, July 10, 1997).

SCOTUS Begged to Differ

In the more than two decades since the policy was adopted, the Supreme Court has made clear not only that there is a strong federal policy in favor of arbitration, but that employment claims – even statutory ones – may be the subject of mandatory predispute arbitration agreements. The Commission on December 17 issued Recission of Mandatory Binding Arbitration of Employment Discrimination Disputes as a Condition of Employment, formally abrogating its 1997 policy “that had disapproved of the practice of requiring workers to enter into arbitration agreements to resolve workplace discrimination claims and instructed its staff to proceed with claims against employers despite the existence of such agreements.” Why the change in policy? Says the EEOC: “Since its issuance, the Supreme Court has ruled that agreements to arbitrate employment-related disputes are enforceable under the Federal Arbitration Act (FAA) for disputes between employers and employees. Circuit City Stores v. Adams, 532 U.S. 105 (2001). In other arbitration-related cases it has decided since 1997, the Court rejected concerns with using the arbitral forum - both within and outside the context of employment discrimination claims. Those decisions conflict with the 1997 Policy Statement.”

The Bottom Line: PDAAs are OK

The Rescission Statement has a long list of Supreme Court cases backing up its assertion, with the result that “the Policy Statement on Mandatory Binding Arbitration does not reflect current law, is rescinded, and should not be relied upon by EEOC staff in investigations or litigation.” Citing EEOC v. Waffle House, Inc., 534 U.S. 279 (2002), however, the revised policy notes that nothing therein “should be construed to limit the ability of the Commission or any other party to challenge the enforceability of a particular arbitration agreement.”

(ed: As we said in SAA 2019-48, it’s about time. We’ve had a hard time understanding how the EEOC, “the federal agency charged with the interpretation and enforcement of this nation’s employment discrimination laws,” could take a position contrary to those laws as defined by SCOTUS.) (SAC Ref. No. 2020-01-02)

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