Supreme Court Clarifies Enforceability of Arbitration Clauses in Collective Bargaining Agreements

The U.S. Supreme Court has held that a collective bargaining agreement that "clearly and unmistakably" requires union members to arbitrate claims under the Age Discrimination in Employment Act (ADEA) is enforceable as a matter of federal law.  The case is 14 Penn Plaza LLC v. Pyett, 129 S.Ct. 1456 (April 1, 2009). The case arose after longstanding employees in an office building were reassigned from positions as night watchmen to lower-paying and otherwise less desirable positions as night porters and light duty cleaners.  At the employees' request, their union filed grievances under the grievance provision of the applicable collective bargaining agreement (CBA).  The grievances challenged the reassignments on various grounds, including age discrimination.  The grievance proceeded to arbitration, but the union withdrew the age discrimination claims before the arbitrator issued a decision.  The employees then filed an age discrimination claim with the Equal Employment Opportunity Commission, which found no violation and issued the employees a right-to-sue letter.  The employees then filed suit against the employer in federal district court, alleging that their reassignment violated the ADEA and state and local age discrimination laws.  The employer filed a motion to compel arbitration, arguing that the employees must arbitrate their age discrimination claims in accordance with the CBA.  The district court and later the circuit court disagreed with the employer, finding that a mandatory arbitration clause in a CBA is unenforceable to the extent that it requires employees to waive the right to pursue federal statutory claims in court.  The Supreme Court reversed those decisions and decided in favor of the employer. In its 1974 decision in Alexander v. Gardner-Denver, the Supreme Court held that an employee could litigate his Title VII race discrimination claim even after he took his grievance to final arbitration under a CBA.  However, in its 1991 decision in Gilmer v. Interstate/Johnson Lane Corp., the Court held that an employee's ADEA claims were subject to compulsory arbitration under the terms of his individual employment contract.  Seven years later, in Wright v. Universal Maritime Service Corp., the Court indicated that the two earlier cases could be reconciled by maintaining that the right to sue in federal court cannot be waived in union-negotiated CBAs even if they can be waived in individually executed contracts.  Whether or not Gardner-Denver's seemingly absolute prohibition of union waiver survives Gilmer, said the Court in Wright, Gardner-Denver at least stands for the proposition that the right to a federal judicial forum will be protected against a "less-than-explicit union waiver in a CBA." The Court has now confirmed as law what it suggested in Wright, that an employee can be compelled to arbitrate an ADEA claim under a union-negotiated arbitration clause provided that the clause "clearly and unmistakably" waives such statutory claims.  In the present case, the CBA's grievance and arbitration provision expressly covered statutory claims, specifically including ADEA claims.  Such a provision must be honored unless the statute itself prohibits such waivers, said the Court, and the ADEA does not include such a prohibition.  The Gardner-Denver decision and its progeny do not apply here, where the CBA's "arbitration provision expressly covers both statutory and contractual discrimination claims." The Court refused to address the employees' argument that the CBA operates as a substantive waiver of their ADEA rights because it not only precludes a federal lawsuit but also allows the union to block arbitration of ADEA claims.  The Court acknowledged that a substantive waiver of federally protected civil rights is unenforceable, but it concluded that the Court could not resolve the question here because the issue was not properly briefed or presented earlier in the case proceedings. In response to this decision, collective bargaining chapters and contractors should review their CBAs to see whether grievance and dispute resolution provisions expressly cover statutory employment claims.  If the provisions do not, the parties may wish to propose more explicit language in collective bargaining negotiations.