Mandatory Arbitration: Something OLD, Something NEW

Abstract

Suppose you are a union employee and feel your employer has discriminated against you because of race, sex, age, or some other basis prohibited by federal civil rights laws. You could file charges with the Equal Employment Opportunity Commission, and eventually bring suit in federal court. But your union representative points out that it would be a lot faster, cheaper, and less stressful to go to arbitration under the company’s collective bargaining agreement. So you do that. And you lose. What now?The standard arbitration clause in a labor contract provides that the arbitrator’s decision shall be “final and binding.” For years the U.S. Supreme Court has emphasized that the courts should enforce an arbitral award without reviewing its merits, as long as the arbitrator had authority to act and did not violate fundamental fairness. Even so, in Alexander v. Gardner-Denver (1974), the Court held that a union employee alleging racial discrimination who lost at arbitration could bring a totally new action in court.The Court reasoned that the arbitrator ruled only on the contractual claim of discrimination, and did not have authority to rule on the separate statutory right. To put it differently, the arbitration provision did not amount to a waiver by the union of the employee’s entitlement to seek a federal forum to vindicate his rights. About twenty years later, however, the Court seemed to go in quite a different direction.