#12324 - Enforcement Of Employment Rights - Employment Law

Christianburg Garment Co. v. EEOC: A prevailing plaintiff can recover attorney’s fees under Title VII absent “special circumstances” that would render such a recovery unjust; a prevailing defendant can recover attorney’s fees under Title VII if the court finds that the plaintiff’s action was frivolous, unreasonable, or without foundation, even if not brought in subjective bad faith.

Bahramipour v. Citigroup Global Markets, Inc.: Opt-out class actions are not permitted under the FLSA; however, if a State’s Unfair Competition Law provides for an opt-out class action against persons who violate listed statutes including the FLSA, this law is not preempted.

• The FLSA has a two-year statute of limitations (three years if the violation was willful); this limitation does not apply to actions brought under state law that incorporate the FLSA by reference.

• In general, State regulation of employment law will be preempted if the State statute constitutes an “obstacle” to the congressional purposes.

Individual Rights & Collective Agents: There are two distinctive roles for worker’s agents: solve the public goods problem inherent in workplace regulation; and reduce the marginal costs of exercising rights conferred to workers.

• Role of government agencies in enforcing statutes is limited; penalties are relatively low, size of regulated industry is enormous, and few resources for conducting inspection

• An individual worker seeking to participate in the enforcement of a workplace statute encounters informational costs:

  • Obtaining information about basic rights

  • Obtaining information about workplace conditions

  • Obtaining information about enforcement procedure

• Other costs include risk of retaliation (cannot be totally alleviated by anti-retaliation provision) and risk of professional backlash

• Without collective agents, statutes may be under-enforced. There may be a collective action problem; the costs of enforcement may exceed the benefit to any particular worker, but the total benefit to the workplace may exceed the cost of enforcement. Individual enforcement is also inferior to collective action because the latter approach can take advantage of economies-of-scale in, e.g., information gathering.

• A collective agent should have the following qualities:

  • Interests aligned with workers

  • A means of efficiently gathering and disseminating information

  • A method of providing protection from employer discrimination against individual workers

• Principal/agent problems may arise if there is a collective organization; however, as long as individual enforcement is still available and there is competition amongst agents, this should not be a significant problem

• Potential candidates for employee agents: (1) labor unions; (2) advocacy groups and national issue organizations; (3) legal services organizations; (4) other public service organizations; (5) workplace committees.

  • Labor union is the best option; it combines alignment of interests with access to information

• Alternatives to creation of new agents:

  • Reduce marginal costs of individual action

    • Punitive damages awards

    • Class action

    • Improved information dissemination

  • Incentivize employers or insurance companies to employ private monitors

  • Improve public interest group access to workers in the workplace

• 1960 Steelworkers Trilogy held that courts were to vigorously enforce collective bargaining agreements providing for arbitration

• Where a collective bargaining agreement provides for arbitration, court must enforce the arbitrator’s award, even if repugnant to logic and justice, so long as “it draws its essence from the collective bargaining agreement.”

• While grievance arbitration is well accepted in the unionized sector, it remains controversial in nonunion employment

Gilmer v. Interstate/Johnson: A contract between a securities representative and the NYSE requiring the representative to submit for arbitration any dispute arising out of employment would be enforced with respect to the representative’s claim under the Age Discrimination in Employment Act.

• The Federal Arbitration Act (FAA) provides that “a written provision in any … contract [providing for the settlement] by arbitration [of] a controversy … shall be valid, irrevocable, and enforceable, save upon such grounds as exist … for the revocation of any contract.”

• The FAA also provides for stays of proceedings in federal district courts, and for orders compelling arbitration. These provisions manifest a “liberal federal policy favoring arbitration agreements.”

• Statutory claims may be the subject of an enforceable arbitration agreement, “unless Congress itself has evinced an intention to preclude a waiver of judicial remedies for the statutory rights at issue”

  • Burden is on party opposing arbitration to demonstrate evidence of such a congressional intent in the text or legislative history of the right-creating statute, or to demonstrate “inherent conflict” between arbitration and the right-creating statute’s purpose

• The Court holds that there is no inherent conflict between the ADEA’s framework and purposes and arbitration

  • The fact that a statute is designed to advance “important social policies” as well as “to address individual grievances” does not preclude enforcement of arbitration

  • The Court finds it significant that an individual can still file a claim with the EEOC under the arbitration agreement; but it does not resolve the question whether courts should decline to enforce arbitration agreements that purport to limit administrative remedies

  • The fact that a rights-creating statute creates a cause of action in federal court is insufficient evidence that Congress intended to preclude arbitration

• The Court rejects the proposition that the arbitration provided by this contract was inadequate to vindicate the plaintiff’s rights

  • Concern about biased arbitrators

    • The FAA provides that courts may overturn arbitration decisions “where there was evident partiality or corruption in the arbitrators”

    • The NYSE rules require that parties be informed of employment histories of the arbitrators, and requires that parties be allowed to make inquiries into arbitrators’ backgrounds. Each party is allowed on peremptory challenge and unlimited challenges for cause.

  • Concern about limited discovery

    • There is no showing that the NYSE’s discovery procedures will prove to be insufficient to allow the plaintiff to pursue his claims

    • Tradeoff: By agreeing to arbitrate, a party trades the procedures and opportunity for review of the courtroom for the simplicity, informality, and expedition of arbitration

      • This theory does not work for waiver of other statutory rights (see Gray-Goto (waiver of right to overtime payment under FLSA not permitted)). Generally the fact that the plaintiff gets something in return is not enough.

  • Concern about written opinions

    • In this case, written opinions are provided

  • Concern about lack of judicial review

    • “Although judicial scrutiny of arbitration awards necessarily is limited, such review is sufficient to ensure that arbitrators comply with the requirements of the statute at issue.”

• “Mere inequality of bargaining power is not a sufficient reason to hold that arbitration agreements are not enforceable.”

• DISSENT (Stevens): I doubt that any legislator who voted for the FAA expected it to apply to statutory claims

Circuit City: Section 1 of the FAA, which excludes from the Act’s coverage “contracts of employment of seamen, railroad employees, or any other class of workers engaged in foreign or interstate commerce,” applies only to workers “actually engaged in the movement of goods in interstate commerce.”

• For the vast majority of employment contracts, a mandatory arbitration clause will be enforced

Cole (D.C. Circuit decision; quoted in Armendariz): There are five minimum requirements for the lawful arbitration of statutory civil rights pursuant to a mandatory employment arbitration agreement:

1. Neutral arbitrator

2. More than minimal discovery

3. A written award

4. All of the types of relief that would otherwise be available (e.g., punitive damages, equitable relief)

5. No requirement that employees pay either unreasonable costs or any arbitrators’ fees

Armendariz: A form of arbitration that, as a practical matter, compels claimants to forfeit their substantive statutory rights is unconscionable and therefore unenforceable.

1. An arbitration agreement may not limit statutorily imposed remedies such as punitive damages or attorneys’ fees;

2. An arbitration agreement that does not permit adequate discovery is unenforceable;

3. An arbitrator in a statutory case must issue a written decision;

4. An...