Numerous employers utilize mandatory agreements with their employees that require resolution of employment disputes through arbitration, rather than by filing a lawsuit. Two significant developments have occurred in this rapidly changing area of the law.
First, the Ninth Circuit Court of Appeals issued the decision of EEOC v. Luce, Forward, et al., in which it held that employees may be required to arbitrate federal claims for employment discrimination pursuant to compulsory arbitration agreements. In the words of the Court; "[W]e now join several other Circuits in concluding . . . that the right to a jury trial presents no bar to compulsory arbitration."
In addition, the California Supreme Court has agreed to resolve the issue of whether these agreements may contain clauses prohibiting an arbitrator from hearing "class action" claims. Such clauses effectively operate as a waiver by the employee of the right to participate in a class action lawsuit. The conflict is presented by two appellate court cases which both, coincidentally, involve Discover Bank. In Szetela v. Discover Bank, the court found the "no class action" clause completely enforceable. In Discover Bank v. Superior Court, another appellate court reached precisely the opposite conclusion. A decision by the California Supreme Court resolving this conflict is expected before spring.
These cases demonstrate that compulsory arbitration of employment disputes continues to be a hot topic.
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