Supreme Court Clarifies EEOC’s Role in Litigating Employment Disputes
Subject to Private Arbitration Agreement
Viability of Private Arbitration to Resolve Workplace Complaints Remains Strong
In its second decision within ten months recognizing the enforceability of private
arbitration agreements, the U. S. Supreme Court, in EEOC v. Waffle House, Inc., has clarified
the role of the Equal Employment Opportunity Commission in litigating discrimination
complaints subject to an arbitration agreement. On January 15, the Court issued its decision
upholding the EEOC’s right to seek all available remedies for job discrimination regardless of
the employer-employee agreement to resolve their disputes through binding arbitration.
Rejecting any limitation upon the Commission’s right to enforce federal anti-discrimination
laws, the Court held: “There is no language in the statute or ... cases suggesting that the
existence of an arbitration agreement between private parties materially changes the EEOC’s
statutory function or the remedies that are otherwise available.”
Jackson Lewis represented the employer in the litigation. Partner David Gordon, who
argued the case before the Court, commented, “We're disappointed in the Court’s ruling, but we
don't believe employers should be discouraged from implementing or maintaining arbitration
systems as a result of this decision. The Court’s decision did nothing to call into question the
viability and enforceability of a fair and reasonable mandatory arbitration procedure for
resolving workplace disputes outside the courtroom.”
Indeed, while reaffirming the EEOC’s independent right to seek remedies for job
discrimination, the Supreme Court acknowledged the longstanding federal policy favoring
arbitration agreements – most recently recognized in its March 2001 decision in Circuit City
Stores, Inc. v. Adams. In Circuit City, the Court unequivocally stated that employment
contracts, including private agreements to arbitrate employment disputes, fall within the Federal
Arbitration Act.
In reaching its decision in Waffle House, the Supreme Court compared the scope of the
EEOC’s enforcement authority with the FAA’s guarantee of enforceability of private agreements
to arbitrate. Since the EEOC itself was not a party to the arbitration agreement between the
company and the individual, the Court found the agency could pursue statutory remedies for the
alleged discrimination, including the “victim-specific” relief of reinstatement, backpay,
compensatory and punitive damages. Once a charge is filed, the Court noted, the EEOC
becomes “the master of its own case ....” and is not a mere surrogate for the aggrieved worker.
Rare Filing of Lawsuit by Agency
The situation the Supreme Court considered in the Waffle House case was unusual. As
the Supreme Court noted in its opinion, the EEOC files suit in less than one percent of all
charges that come before it each year. In fact, in fiscal year 2000, the Commission filed fewer
than 300 lawsuits, representing less than five percent of all cases in which the agency itself found
reasonable cause to believe discrimination occurred. In contrast, alleged victims of employment
discrimination filed more than 21,000 lawsuits in the federal courts in 2000.
Thus, it was a rare occurrence that the EEOC subsequently filed the lawsuit
independently of the employee, alleging the company’s employment practices, including the
discharge, violated the ADA. Although the employee had agreed to resolve any disputes with his
employer through arbitration, instead he had gone directly to the EEOC with his complaint.
In the lawsuit, the agency sought injunctive relief to eradicate the effects of the alleged
unlawful practices, as well as specific relief designed to make the employee whole. Rather than
dismiss the case because of the binding arbitration agreement between the parties, the EEOC had
authority to exercise its enforcement powers, including seeking monetary and other remedies that
are specific to the individual employee, the Supreme Court found.
Where Does Arbitration of Employment Disputes Stand Now?
Many employers may be wondering whether this Supreme Court decision limits the
enforceability or desirability of private agreements to arbitrate employment disputes. The first
place to look for an answer to those questions is the language of the decision itself, where the
Court commented that the EEOC’s ability to seek relief in cases where an employee has agreed
to binding arbitration, but has not yet invoked the procedure, “will have a negligible effect on the
federal policy favoring arbitration.” The Court went on to say that given the EEOC’s restrained
litigation practice over the past 20 years, concerns that this decision will discourage use of
arbitration agreements are “highly implausible.” “When speculating about the impact this
decision might have on the behavior of employees and employers, we think it is worth
recognizing that the EEOC files suit in less than one percent of the charges filed each year,” the
Court noted.
The reasons employers have turned to the private arbitration of employment disputes
have not disappeared. In the past decade, the tremendous increase in employee lawsuits, the
ability of plaintiffs to recover virtually unlimited damage awards, and the unpredictability of
juries have combined to make employment litigation even more treacherous and costly for
employers. Arbitration offers a change of forum, while still assuring the parties the same rights
and remedies as a court or fair employment practice agency.
Editor’s Note: This article is provided for informational purposes and is not intended to be legal advice.
Readers should consult counsel of their own choosing for their particular questions and concerns. The Jackson
Lewis Alternative Dispute Resolution Practice Group is available to assist employers in developing, implementing,
and enforcing alternative dispute resolution programs, including mandatory pre-dispute arbitration.
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For more information about Jackson Lewis, please visit our web site: www.jacksonlewis.com,
or contact Paul J. Siegel, Esq. by telephone at 516-364-0404, or via e-mail at
siegelp@jacksonlewis.com
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