The trend nationally has been to require employees through individual arbitration agreements to arbitrate their legal claims on the theory that the arbitration process is quicker and cheaper than going to court. Some employers are going the opposite direction, however, and putting provisions into their grievance and arbitration procedures indicating that an employee waives the right to continue to use those procedures if they use outside government agencies to process their claims.
An employee has a statutory right to pursue a discrimination claim in federal court. An employee may also have a contractual right, often established by a collective bargaining agreement, to pursue discrimination claims through a grievance process or arbitration. In most circumstances, both (statutory and contractual) rights have legally independent origins and are equally available to the aggrieved employee.
An older case dealt with a collective bargaining agreement which provided that if an employee "seeks resolution of the matter in any other forum, whether administrative or judicial, the [employer] shall have no obligation to entertain or proceed further with the matter pursuant to this grievance procedure." The Seventh Circuit Court of Appeals ruling found that, because it authorizes the employer to take an adverse employment action (termination of the in-house grievance proceeding) for the sole reason that the employee has engaged in protected activity (filing a discrimination claim), the provision was a retaliatory policy and a per se violation of the discrimination law. EEOC v. Board of Governors of State Colleges and Universities, 957 F. 2d 424 (C.A. 7, 1992).
A more recent ruling from the Second Circuit reaches the opposite conclusion, finding the policy was not discriminatory because it does not foreclose other avenues of relief, such as the right to pursue claims in federal court. It was simply an "election-of-remedies provision which avoids duplicative proceedings." Richardson v. Commission on Human Rights and Opportunities, 532 F. 3d 114 (C.A. 2, 2008).
Thus, there is a "split in the circuits" on this issue, although the most recent district court ruling on this subject agrees with the Second Circuit finding that such an election-of-remedies provision streamlines dispute resolution and avoids the expense and uncertainty of having the same issue decided in two different proceedings. Watford v. Jefferson County Public Schools, 128 FEP Cases 1462 (W.D. Ky. 2016).
The National Labor Relations Board (NLRB) has asked the Supreme Court to review whether arbitration agreements that prohibit employees from pursuing class or collective actions are unlawful under the National Labor Relations Act (NLRA). NLRB v. Murphy Oil USA, Inc., U.S., No. 16-307, cert. petition 9/9/16. This issue is monumental, as up until recently the federal appeals courts have been ruling that the Federal Arbitration Act expresses a policy in favor of enforcing arbitration agreements like the ones at issue. These rulings allowing such broad arbitration provisions banning class and collective actions have been upheld by the federal circuit courts of appeal in the Second, Fifth, Eighth and Eleventh Circuits. The circuit courts of appeal from the Seventh and Ninth Circuits have reached a contrary result.
The magnitude of the issue is shown in cases such as those involving Uber Technologies, Inc. Uber is being sued in various cases across the country contending that its contract workers are actually employees, subject to the legal protections of the employment laws including those pertaining to minimum wage and overtime, unionization, discrimination, etc. In the face of such litigation threats, Uber instituted a national arbitration policy requiring its contract workers to resolve their disputes with the company through individual arbitration cases, rather than class or collective actions in court. In just one of the cases, Uber had agreed to pay as much as $100 million to cover drivers in several states, but a federal judge rejected the proposed settlement. In that case, a federal appeals court later ruled that Uber’s arbitration clause was enforceable, reducing the size of the pending class action to the small percentage of drivers who had opted out of the arbitration agreements. Mohamed v. Uber Techs., 2016 WL4651409 (C.A. 9, 9/7/16). Advocates of arbitration agreements argue that it is a fairer process and much less costly and quicker than lengthy court class action litigation.
As a result of this and other similar litigation, a majority of Fortune 500 companies have elected to institute individual arbitration agreements with their employees, often in devices as simple as including such provisions on their employment applications. As a result, employers have been able to lessen the volume of court litigation, while providing their employees a quicker and easier way to pursue legal claims. Recently the proliferation of arbitration provisions prohibiting class and collective action have become common, thus providing further protection to employers.
In recent years, the NLRB has been attacking these provisions, contending that such agreements banning class or collective actions unlawfully interfere with the employees’ rights under the NLRA to engage in concerted activity by participating in such class or collective actions. Thus, in D.R. Horton, Inc., 357 NLRB No. 184 (2012), the NLRB found that an employer violated the NLRA by enforcing an arbitration policy that prohibited any participation in a class, collective or similar actions by employees. The Fifth Circuit denied enforcement of that ruling at 737 F. 3d 344 (C.A. 5, 2013), and 808 F. 3d 1013 (C.A. 5, 2015). The NLRB argued in its petition for Supreme Court review that while the Federal Arbitration Act expresses a policy in favor of enforcing arbitration agreements, the savings clause in that law at 9 U.S.C. § 2, doesn’t require enforcement of an arbitration agreement that is illegal under a different law, the NLRA. Meanwhile, the NLRB continues to issue many dozens of rulings finding such class and collective action waivers to be unlawful under the NLRA. More recently, the NLRB has also found that an employer violates the Act by refusing to hire an employee who refuses to sign such a waiver of class and collective action rights. Keiser University, 363 NLRB No. 73 (12/23/15).
Editor’s Note: Many employers "swear by" individual employment arbitration provisions with class and collective action waivers. They contend arbitration is quicker, cheaper and generally private. Employees are not necessarily opposed to such quicker means of resolving their legal claims, although a few are skeptical and oppose such agreements as giving up their rights to "go to court." The potential disadvantage, however, is that because such provisions allow a simpler and quicker means of legal redress, more employees might be potentially inclined to use these procedures to bring claims. Most employers have found, however, that the use of such arbitration procedures is not excessive.
Some public interest groups feel that mandatory arbitration provisions are not fair, and should be found to be unenforceable, unless an employee plaintiff voluntarily decides to enter into such an agreement after bringing a lawsuit in court. The legal resolution of opposition to such arbitration agreements that bar class and collective actions is based on a potential conflict between the current NLRB’s interpretation of "concerted" activity, and the Federal Arbitration Act’s provisions encouraging enforcement of arbitration agreements. The Supreme Court is likely to review this conflict in light of the split of circuits and the importance of the issue. Further, the NLRB has more recently "raised the stakes" in such claims by finding an employer’s refusal to hire an applicant to be unlawful because of that applicant’s refusal to sign an arbitration agreement waiver of class or collective actions.
The subject of dress and grooming has been a controversial one as to the scope of the discrimination laws. In the most recent case, a federal appeals court rejects a claim of the Equal Employment Opportunity Commission (EEOC) that a "prohibition of dreadlocks in the workplace constitutes race discrimination because dreadlocks are a manner of wearing the hair that is physiologically and culturally associated with people of African descent." EEOC v. Catastrophe Management Solutions, 129 FEP Cases 935 (C.A. 11, Sept. 15, 2016).
An African-American job applicant was interviewed and offered a position as a customer service representative, a position that did not have contact with the public. She was told, however, that she could not be hired with the dreadlocks, and she was not hired when she refused to do so. At the time, the employer had a race-neutral grooming policy which read as follows:
"All personnel are expected to be dressed and groomed in a manner that projects a professional and businesslike image while adhering to company and industry standards and/or guidelines. . . . [H]airstyle should reflect a business/professional image. No excessive hair styles or unusual colors are acceptable."
The EEOC sued on behalf of the applicant, and cited its Compliance Manual, Section 15-II, at 4 (206), which indicates: "Title VII prohibits employment discrimination against a person because of cultural characteristics often linked to race or ethnicity, such as a person’s name, cultural dress and grooming practices, or accent or a manner of speech." The Eleventh Circuit Court of Appeals refused to give the EEOC guidance much weight in determining the scope of Title VII's prohibition of racial discrimination, noting that the EEOC had changed its position on the issue over the years and failed to address certain court precedents taking a different position.
The court discusses the history of the word "race," noting that Title VII does not define the term nor has the EEOC ever seen fit to issue a regulation defining the term. Therefore, the court concludes that the meaning of the word "race" is a question of law for the court. The Eleventh Circuit concludes that it is more likely than not that "race" as a matter of language and usage, refers to common physical characteristics shared by a group of people and transmitted by their ancestors over time. More importantly, although dictionaries do not use the word "immutable" to describe such common characteristics, it is not much of a stretch to think that such characteristics are a matter of birth, and not culture. If it were otherwise, it would create a problematic category for legal intervention because culture in a broad sense encompasses almost any possible motivation for human behavior.
The court goes back to its earlier cases providing guidance, noting that for many years courts have allowed employers to reject discrimination claims by male applicants who were denied a position because their hair was too long. Such rulings are based on findings that a hiring policy that distinguishes on grounds such as grooming or length of hair is related more closely to the employer’s choice of how to run its business than equality of employment opportunity. Thus, courts have adopted the view that distinctions in employment practices between men and women on the basis of something other than immutable or protected characteristics do not inhibit employment opportunity in violation of Title VII. This is particularly so where grooming and hair standards are also imposed on female employees, and thus in that sense men and women are treated equally. The concept is that Title VII protects against discrimination based on immutable characteristics - those that an employee is born with or cannot change. This analysis suggests that Title VII protects persons in covered categories with respect to their immutable characteristics, but not their cultural practices. The court gives an illustration that discrimination on the basis of black hair texture (an immutable characteristic) is prohibited by Title VII, while adverse action on the basis of black hairstyle (a mutable choice) is not.
The Eleventh Circuit notes that almost every court to have considered the issue has rejected the argument that Title VII protects hair styles culturally associated with race. Such issues are better resolved through the democratic process, particularly given the role and complexity of race in our society.
While the court respects the claimant’s intensely personal decision to not cut her dreadlocks, such a complaint does not state a plausible claim that the employer intentionally discriminated against her because of her race. In a footnote, the court notes that religion is different from race as Title VII expands the protection for religion to cover "religious observance and practice." In contrast, race discrimination laws do not prohibit discrimination on the basis of cultural practices associated with race.
Editor’s Note: While the current case reflects the prevailing view among the courts, dress and grooming requirements remain controversial and claims continue to be filed. Many employees prohibit extreme hair and grooming styles including, but not limited to, unusual hair colors, dreadlocks, braids, corn rows, etc. Further, religious discrimination laws are broader than the race discrimination laws, as noted by the court, because they protect religious practices and also require reasonable accommodation of such religious practices.