New York Discrimination Update: May, 2011

U.S. Supreme Courts Permits Arbitrators to Rule on the Enforceability of Arbitration Agreements in Employment Matters

Increasingly, employers are requiring employees to sign mandatory arbitration agreements as a condition of employment. For the vast majority of employees, an arbitration agreement is presented to him or her, by the employer, on a take-it-or-leave-it basis, with no opportunity for negotiation. Because employees have substantially less leverage than employers, and are generally not provided any meaningful opportunity for negotiation, mandatory arbitration agreements have been criticized as contracts of "adhesion" that are unfairly thrust upon employees. Nonetheless, such agreements are generally favored by the courts, and the trend is toward their strict enforcement by the courts. As a result, employees who are victimized by discrimination in the workplace are increasingly being denied access to the courts.

The trend toward judicial enforcement of mandatory arbitration agreements in employment matters is exemplified by the Supreme Court's 2010 decision in Rent-A-Center West, Inc. v. Jackson, 130 S. Ct. 2772 (2010). In that case, the employee filed a federal court action in which he challenged the termination of his employment. The defendant-employer moved to dismiss the federal complaint based on the plaintiff's execution of an agreement, which provided that claims regarding his employment, as well as issues regarding the enforceability of the arbitration agreement, were to be exclusively decided through arbitration. The Supreme Court issued a decision in favor of the employer, ruling that under the Federal Arbitration Act, arbitration agreements are a matter of contract, and must be enforced by courts in accordance with their terms.

Clearly, the increased prevalence of requiring the execution of mandatory arbitration agreements as a condition of employment, combined with the trend toward enforcement of those agreements, has profoundly negative consequences for employees. In increasing numbers, employees who have been victimized by discrimination are being denied the right to have their claims heard by courts. Even worse, the Supreme Court's decision removes the courts from any meaningful role in ensuring that the arbitration process, in which employees are involuntarily thrust, is fair and protective of their rights.

By: Marc A. Rapaport, Esq.