EEOC's Pilot Program

Jay W. Waks is a litigation partner at New York’s Kaye Scholer, where he chairs its employment and labor law practice, representing corporate clients. SaraJane Steinberg is an associate in the firm’s employment and labor law practice. With considerable fanfare, the Equal Employment Opportunity Commission (EEOC) has begun a pilot program that targets a limited number of companies having internal dispute-resolution programs meeting specific criteria. Under the program, if an employee of a targeted company files a charge of discrimination, the EEOC, with the consent of that employee, would suspend processing of the charge for up to 60 days to give the parties an opportunity to resolve the dispute using the employer’s dispute-resolution program. In order to be eligible to participate, an employer’s internal program must satisfy six threshold criteria: First, participation in the program must be voluntary. Also, the program must be up and running, have clearly written procedures, be free to the employee and address all claims and relief available under the statutes enforced by the EEOC. Finally, all settlements must be in writing and enforceable in court. See www.eeoc.gov/press/3-24-03.html. This pilot is intended to supplement the EEOC’s National Mediation Program, first implemented in 1999. The new pilot, however, sets up a 60-day time frame within which to resolve a charge, which is rather ambitious inasmuch as, according to the EEOC’s own enforcement data, the average time to resolve a charge through the EEOC’s National Mediation Program was 84 days in fiscal 2001. See www.eeoc.gov/press/2-22-02.html. Consistent with the EEOC’s long-held view that mandatory arbitration imposed as a condition of employment is contrary to civil rights laws and does not promote the principles of a sound alternative dispute resolution (ADR) program (see www.eeoc.gov/press/7-17-95.html), its pilot program is undoubtedly not meant to sanction arbitration pursuant to a predispute workplace agreement. Courts, however, have uniformly rejected the EEOC’s notion that predispute arbitration agreements are inconsistent with enforcement of civil rights laws. See, e.g., Circuit City Stores Inc. v. Adams, 532 U.S. 105 (2001); Gilmer v. Interstate/Johnson Lane Corp., 500 U.S. 20, 27 (1991); and EEOC v. Luce, Forward, Hamilton & Scripps, 303 F.3d 994, 1004 (9th Cir. 2002). Deferral to workplace arbitration is not new Although the EEOC may frown upon employer-sponsored arbitration procedures, deferral to workplace arbitration by a federal agency is hardly a novel phenomenon. Under the principles established by Spielberg Manufacturing Co., 112 NLRB 1080 (1955), and its progeny, the National Labor Relations Board has been deferring to the arbitration process and to arbitration awards for nearly five decades. Moreover, in contrast to the EEOC, Solicitor Eugene Scalia of the U.S. Department of Labor recently outlined the principles to be weighed by attorneys in the solicitor’s office in deciding whether to litigate an employment matter that is subject to an arbitration agreement. See www.dol.gov/sol/media/ memos/August9.htm. Referring to the U.S. Supreme Court’s decision last term in EEOC v. Waffle House Inc., 534 U.S. 279 (2002), Scalia noted that “ Waffle House is a welcome affirmation of the government’s litigation authority and its unique role in enforcing the law. The Department must balance this authority, however, with what the Supreme Court has called our ‘liberal federal policy favoring arbitration agreements.’ ” Id. Waffle House highlights the public importance of having the EEOC take account of established workplace arbitration programs in deciding which cases the government should pursue. As the majority observed, the EEOC files suit in only a small fraction of workplace discrimination charges. 534 U.S. at 290 n.7. It could be seen as counterproductive to the interests of tens of millions of employees and employers in having disputes promptly and effectively resolved-including the vast majority that never are brought to court or never would survive litigation-if employers were dissuaded by the looming prospect of an EEOC suit under the Waffle House approach from implementing ADR systems that include final and binding arbitration as the final step. Rather, it would seem to be in the best interests of regulatory agencies to encourage these workplace ADR systems while reserving their statutory authority to act in particularly egregious cases. With this goal in mind, an argument could be made for the EEOC to establish standards by which to consider a deferral to workplace arbitration. Under this approach, deferral would be determined by the EEOC as a threshold matter; and if, in the EEOC’s view, deferral would not serve the public interest in an individual case, the EEOC then would have to determine, as it now does, whether the case warrants filing a court action under the applicable employment laws. The proposed criteria set forth below are drawn from principles discussed in the case law universally cited in virtually every knowledgeable discussion of the adjudication of statutory claims through workplace arbitration programs: Gilmer v. Interstate; Amendariz v. Foundation Health Psychcare Services Inc., 24 Cal. 4th 83, 6 P.3d 669 (2000); Cole v. Burns International Security Services, 105 F.3d 1465 (D.C. Cir. 1997); Spielberg Manufacturing Co.; and Collyer Insulated Wire, 192 NLRB 837 (1971). Applying these principles, the EEOC could consider deferral to workplace arbitration when the following conditions are met with regard to statutory claims: First, the arbitration agreement should appear to be valid and enforceable as a prima facie matter. The EEOC should also articulate minimum standards to determine if the employee’s agreement is “knowing and voluntary” inasmuch as most predispute arbitration agreements are a condition of employment. For example, an agreement to arbitrate should be considered “knowing and voluntary” when the employer has provided a verbal or written explanation of the key provisions of the agreement; the employer has advised the employee that he or she is giving up the right to trial and trial by jury and that such a right is of value; the employer has given the employee a minimum period of time (e.g., five days) during which the employee may consider whether to sign the agreement; and the employer has advised the employee that he or she may want to consult with an attorney before signing. Essentially, these are the key elements that would likely defeat an effort to dismiss an action to compel arbitration under the Federal Arbitration Act or applicable state law. The arbitration agreement should also expressly cover statutory claims and should not interfere with statutorily authorized remedies or award of attorney fees. The agreement should provide for (or the employer should have asserted that it will consent to) the mutually acceptable selection of an arbitrator with at least 10 years of experience as a practicing attorney, or as an arbitrator, in the field of employment discrimination law. The arbitration agreement should also provide for (or the employer should have asserted that it will consent to) the employee being represented by counsel of choice in the arbitration, and mutual discovery of at least all documents directly applicable to the dispute and one deposition for each side, with any supplemental discovery requests and disputes to be determined by the arbitrator. In addition, the agreement should provide for (or the employer should have asserted that it will consent to) payment by the employer of all forum costs and fees that are unique to arbitration, and should provide for an arbitration award that is accompanied by a written decision stating the essential findings of fact and conclusions of law on which the award is based. Moreover, the party seeking deferral should assert a willingness to participate in the arbitration without delay and waive any argument that submission of the statutory issues to arbitration is untimely. Further, a (rebuttable) presumption in favor of deferral should apply when the arbitration will address contractual or other nonstatutory matters, in addition to statutory issues. A (rebuttable) presumption against deferral should apply when the arbitration will address issues that have been identified by the EEOC as “priority” issues or under circumstances in which there are or have been other egregious statutory violations committed by the same employer. Employees may fare better with arbitration In the final analysis, the efforts by plaintiffs’ counsel to chip away at predispute arbitration agreements may not necessarily result in any better enforcement of the EEO laws. Indeed, at least one recent study finds that employees fare better in arbitration than in litigation, as measured by the time to reach a resolution, the expense of the process and the likelihood of success. M. Delikat and M. Kleiner, “A Study: Do Employees Better Vindicate Their Rights in Litigation or Arbitration?,” N.Y. Employment L. & Prac., December 2002. Given that the right to a jury trial, although fundamental, is waivable before a dispute has arisen (see, e.g., Brown v. Cushman & Wakefield Inc., No. 01 CIV 6637, 2002 WL 1751269 (S.D.N.Y. July 29, 2002)), employers may opt to abandon arbitration altogether and turn to the adoption of jury waivers, making a bench trial the final step in internal dispute-resolution programs instead of arbitration. Substituting the jury trial waiver for arbitration, however, would turn the clock back to the days before the Civil Rights Act of 1991, when bench trials generally were the rule and defendant corporations were not subject to the in terrorem threat of jury trial justice. Such a result would deprive employees and employers alike of the many benefits of arbitration and would add to the congestion already plaguing our courts. Now that the U.S. Department of Labor has paved the way, the EEOC should consider the possibility that deferral to workplace ADR, including arbitration, can make good policy and business sense.