Labor and Mandatory Arbitration Agreements: Background and Discussion

Publication Date: June 2002

Publisher: Library of Congress. Congressional Research Service

Author(s):

Research Area: Labor

Type:

Abstract:

In response to the rising number of discrimination claims brought under federal civil rights statutes, many employers have sought to require arbitration for statutory claims by having their employees sign mandatory arbitration agreements. These agreements provide generally that all claims arising out of one's employment will be heard by an arbitrator or panel of arbitrators rather than by a judge or jury. Arbitration is often perceived by employers as a faster and less expensive alternative to litigation. Arbitration agreements also appear in the context of organized labor as unions and employers negotiate for mandatory arbitration in collective bargaining agreements.

The U.S. Supreme Court's decision in Wright v. Universal Maritime Service Corp. is the Court's most recent attempt to explain when a mandatory arbitration agreement will be enforced to require arbitration of a statutory claim. Although the Court found that an arbitration agreement will not be enforced when it does not explicitly require arbitration for statutory claims and when there has not been a "clear and unmistakable" waiver of a judicial forum for such claims, the Court resisted any further discussion about a union's ability to waive a judicial forum for employees.

While the Court recognized the tension between two lines of case law that have developed since two previous Supreme Court cases were decided, it chose to decide Wright solely on the basis of its facts. Thus, the question remaining after Wright is likely to go unanswered until the Court agrees to review a case with more appropriate facts or Congress chooses to legislate in this area.

Because the Civil Rights Act of 1964, the Age Discrimination in Employment Act, and the Americans with Disabilities Act each provide for judicial relief, some contend that mandatory arbitration agreements undermine the intent of Congress. In addition, others argue that mandatory arbitration agreements support an employer's superior bargaining position as employees are forced to sign such agreements in order to obtain employment. For these reasons, the enforceability of mandatory arbitration agreements is likely to be of interest to Congress.