Employers, Don’t Forget The EEOC Carve-Out In Your Mandatory Arbitration Agreement
This blog post originally appeared in Forbes.com.
The Equal Employment Opportunity Commission likes to protect its turf. While the EEOC files relatively few lawsuits – it filed 167 lawsuits in fiscal year 2014, while it processed over 88,000 charges – the EEOC will not hesitate to take actions against employers that prevent employees from filing EEOC charges.
So employers, if you have a mandatory arbitration agreement, review it carefully. If it does not contain a carve-out that expressly allows employees to file EEOC charges, consider amending it. Now.
Doherty Enterprises, Inc. may have done so too late. Doherty operates 140 franchise restaurants, including Applebee’s and Panera Bread locations in Florida, Georgia, New Jersey and New York. The company had a mandatory arbitration agreement in which employees agreed that:
any claim, dispute and/or controversy (including but not limited to any claims of employment discrimination, harassment, and/or retaliation under Title VII and all other applicable federal, state, or local statute, regulation or common law doctrine) which would otherwise require or allow resort to any court or other governmental dispute resolution forum between myself and Doherty Enterprises … shall be submitted to and determined exclusively by binding arbitration….
The agreement contained no exception for the filing of administrative charges with the EEOC. And so last year, the EEOC sued Doherty, asserting that this arbitration agreement constitutes a pattern and practice of “resistance to the full enjoyment” of the rights secured by Title VII of the 1964 Civil Rights Act.
Doherty moved to dismiss the complaint, but on September 1, 2015, the federal district court denied Doherty’s motion. One of the points raised by Doherty was that in January 2015, it amended its arbitration agreement to include a carve-out; the agreement now says that it “does not prohibit applicants or employees from filing charges with the EEOC.” But the court declined to rule on this argument at the motion to dismiss stage. The court did rule that the EEOC was authorized to file suit against employers in the absence of an underlying charge of discrimination. The court also ruled that the EEOC had standing to sue Doherty despite the fact that it is not a party to the arbitration agreement.
And so the lawsuit against Doherty continues. It remains to be seen whether the court will rule that Doherty’s failure to include the EEOC carve-out was unlawful, and if so, whether its amendment of the arbitration agreement makes the case moot. But having already amended its arbitration agreement, it’s clear that Doherty has decided that it should have included the carve-out to begin with. I agree. Depriving employees of their right to file EEOC charges will not be tolerated by the EEOC and generally is frowned upon by the courts – even if the employees will ultimately have to arbitrate their claims rather than litigate them in court.