The United States Supreme Court handed a clear win for employers in 14 Penn Plaza LLC v. Pyett. Members of the Service Employees International Union, were employed to provide security services to a New York City office building owned and managed by 14 Penn Plaza. A provision in the collective bargaining agreement prohibited discrimination, but stated “all such claims shall be subject to the [applicable] grievance and arbitration procedures… as the sole and exclusive remedy for violations.”
After some of the Union employees were reassigned to different responsibilities the Union alleged that these reassignments were based on unlawful age discrimination and violated provisions of the collective bargaining agreement. The Union filed complaints of age discrimination with the Equal Employment Opportunity Commission and ended up in federal court. The building owner wanted the court to compel arbitration.
The Supreme Court concluded that a union may bargain for a mandatory arbitration provision related to individual employment rights. As a result, the Court gutted the precedent set in its 1974 decision, Alexander v. Gardner-Denver. That case concluded that a collective bargaining agreement could not waive covered workers’ rights to a judicial forum. This new Penn Plaza Court decision distinguished Gardner-Denver by stating that the collective bargaining agreement provision at issue in Penn Plaza expressly covered both statutory and contractual discrimination claims.
The use of collective bargaining agreements is outside my area of expertise, but this case caught my eye because it involved a commercial property owner and its union employees.
In addition, this decisions could be a silver lining to the Employee Free Choice Act for those employers who are opposed to it. The EFCA, in its current form, would allow unions to more easily organize because it eliminates the secret ballot requirement. In light of this Penn Plaza decision, employers that are successful in negotiating comprehensive mandatory arbitration provisions into a collective bargaining agreement may at least reap the benefit of avoiding jury trials in favor of arbitrations of discrimination and other employment-related claims. Of course the unions are aware of this decision and may resist sweeping mandatory arbitration provisions.
But don’t take my word on it. Consult your labor and employment lawyer.