[This posting is for informational purposes and should not be construed or interpreted as either legal advice on any matter or as in any way creating an attorney/client relationship]
In a 5-4 decision, the U.S. Supreme Court held today in 14 Penn Plaza LLC v. Pyett, that a provision in a collective bargaining agreement (CBA) that explicitly requires union members to arbitrate Age Discrimination in Employment Act (ADEA) claims is enforceable as a matter of federal law.
In Pyett, three union employees brought an action in federal court against their employer, 14 Penn Plaza LLC, under the ADEA. Pyett and his two co-workers were members of a union that had previously negotiated a CBA that explicitly provided that all discrimination claims between union members and Penn Plaza would be handled exclusively through arbitration.
Penn Plaza moved to dismiss the ADEA claim pending in federal court because the CBA mandated arbitration of discrimination claims. The district court denied the employer’s motion and, on appeal, the 2nd U.S. Circuit Court of Appeals affirmed the lower court’s ruling. Both courts reasoned that a union did not have the authority to waive a union member’s right to a judicial forum for a statutory discrimination claim.
The Supreme Court, however, disagreed. In a “straightforward” analysis of the ADEA and the National Labor Relations Act (NLRA), the majority stressed that the union, the collective bargaining agent for Pyett and his co-workers, had bargained with the employer, Penn Plaza, in good faith. The two sides agreed that employment-related discrimination claims, including ADEA claims, would be resolved in arbitration.
The Supreme Court previously had suggested that arbitration was “a comparatively inappropriate forum for the final resolution of [employment] rights.” The Pyett court dismissed this notion as a “mistaken suggestion.” It reasoned that management and union are free to negotiate an arbitration agreement: a contractual term that qualifies as a “condition of employment” subject to mandatory bargaining under the NLRA. The Supreme Court will not disturb a bargained-for contractual exchange because that would be contrary to one of the “fundamental policies of the National Labor Relations Act -- freedom to contract.”
Accordingly, employers, unions and their members are now on notice: a clear and unmistakable provision in a CBA mandating the arbitration of federal age discrimination claims will be honored. Further, there is good reason to believe that this carefully tailored arbitration agreement may extend to other federal discrimination claims if the federal statute itself does not preclude arbitration of such claims.