Man signing a mandatory arbitration agreement for employment.

EEOC Rescinds Mandatory Arbitration Policy

By Douglas Lipsky

For 22 years, the U.S. Equal Employment Opportunity Commission has maintained a policy statement objecting to the use of mandatory arbitration agreements for employment discrimination claims. In December 2019, the agency rescinded its long-standing policy statement in a 2-1 decision. In light of this development, the best way for employees to protect their rights against workplace discrimination is to consult an experienced employment lawyer.

The Backdrop of the EEOC Mandatory Arbitration Policy

The EEOC’s 1997 Policy Statement opposed the mandatory arbitration of workplace bias claims as a condition of employment because the use of such “unilaterally imposed agreements” harms a claimant’s civil rights. At the time, the EEOC concluded that the development, interpretation and enforcement of federal anti-discrimination laws is a matter of public interest and that mandatory arbitration agreements undermine both the private right of action and the public enforcement of such laws. 

The rescission is in response to numerous federal and U.S. Supreme Court rulings affirming the enforceability of arbitration agreements in the years since the EEOC issued the policy statement. In 2001, for example, the high court ruled that mandatory agreements to arbitrate employment-related disputes are enforceable under the Federal Arbitration Act. 

The Supreme Court has also supported the use of such agreements in a wide range of arbitration-related cases other than workplace discrimination. However, the Court has held that an arbitration agreement does not preempt an employee’s right to file a claim with the EEOC or bar the agency from litigating an employment discrimination charge on behalf of an employee. 

In short, the EEOC rescinded its 1997 Policy Statement because it does not reflect current law. In rescinding the statement, however, the agency noted that this action does not limit its, or any other party’s ability to challenge the enforceability of a particular arbitration agreement. 

Why This Matters

Given the Supreme Court rulings supporting the use of mandatory arbitration agreements, many employers have implemented mandatory arbitration provisions in employment agreements. By rescinding its 1997 Policy Statement, the EEOC has signaled employers that arbitration agreements will be enforced by the courts. Moreover, as we wrote in a recent blog about amendments to the New York State Human Rights Law, prohibiting employers from compelling arbitration of discrimination claims will likely be preempted by federal court rulings. 

While it is unclear whether arbitrating discrimination claims is less advantageous to employees, it does shield employers from public scrutiny, which invariably makes it more difficult to hold them accountable. At the end of the day, if you have been asked to sign a mandatory arbitration agreement as a condition of employment, you should consult an experienced employment lawyer.

About the Author
Douglas Lipsky is a co-founding partner of Lipsky Lowe LLP. He has extensive experience in all areas of employment law, including discrimination, sexual harassment, hostile work environment, retaliation, wrongful discharge, breach of contract, unpaid overtime, and unpaid tips. He also represents clients in complex wage and hour claims, including collective actions under the federal Fair Labor Standards Act and class actions under the laws of many different states. If you have questions about this article, contact Douglas today.