Bad result for employees over 40: The US Supreme Court has held that a union can agree that age discrimination claims must be arbitrated.
14 PENN PLAZA LLC ET AL. v. PYETT ET AL. Decided April 1, 2009.
The Supreme Court ruled 5 to 4. A collective-bargaining agreement can require union members to arbitrate age-discrimination claims. That is, the claim will be arbitrated and cannot be brought in court. This is bad for older workers because arbitration is a poor forum for employees. For example, there is no jury in an arbitration. (For a discussion about how bad arbitration is even between businesses see the recent blog post, on a law site, Another Unfortunate Arbitration Agreement.)
The 14 Penn Plaza case involved night watchmen and a real estate company, 14 Penn Plaza LLC. The company is a member of a multiemployer bargaining association for New York City real-estate companies.
The night watchmen were downgraded to lower-paying jobs as porters and cleaners after the company, with the union’s consent, hired a unionized security contractor to provide security guards for the building.
The reassigned employees asked their union to file a grievance, because the undesireable reassignments were made because of their age, in violation of Age Discrimination in Employment Act (ADEA). The employees said the new jobs had lower income and were undesirable compared to their former jobs.
The union requested arbitration under the collective-bargaining agreement. After the initial hearing, the union withdrew the age-discrimination claims, because the new security contract prevented it from objecting to the workers’s reassignments as discriminatory.
The reassigned workers then filed a complaint with the Equal Employment Opportunity Commission, and received a right-to-sue letter.
After the employees filed their suit in court, the company moved to compel arbitration of the age-discrimination claims. The trial court denied the motion, and the U.S Court of Appeals for the Second Circuit affirmed, holding that under an earlier Supreme Court decision, Alexander v. Gardner-Denver Co., collective-bargaining agreements could not deny the right to a court proceeded by requiring arbitration of age discrimination claims.
The Supreme Court reversed. “There is no legal basis for the court to strike down the arbitration clause in this collective-bargaining agreement, which was freely negotiated by the union and the RAB, and which clearly and unmistakably requires respondents to arbitrate the age-discrimination claims at issue in this appeal.”
The court rejected the employees’ argument that such an arbitration clause is invalid because it affects the employees’ individual statutory rights.
A provision in a collective-bargaining agreement that clearly and unmistakably requires union members to arbitrate ADEA claims is enforceable. The Union agreed that employment-related discrimination claims, including ADEA claims, would be resolved in arbitration. The ADEA does not preclude arbitration of claims brought under the statute.