Originally from Employment Arbitration - 2nd Edition

The Basic Judicial Position

Thomas E. Carbonneau

The case law on employment arbitration overlaps with the judicial litigation relating to the use of arbitration in other adjudicatory areas. The overlap is particularly marked between employment and securities arbitration. In the latter, claims by brokers or other brokerage employees that they have been mistreated or discriminated against on a gender or racial basis by fellow employees, supervisors, or the management of the firm (in violation of Title VII and the 1964 and 1991 Civil Rights Acts) can be classified as cases involving either securities or employment arbitration. These cases nonetheless retain a character that is predominantly associated with employment arbitration and the question of whether employment discrimination claims are arbitrable. In effect, recourse to arbitration is being had to resolve workplace civil rights claims that happen to arise in the securities industry.

Two critical questions are repeatedly brought before the courts in employment arbitration cases. These questions represent essentially the two sides of the same coin. First, are contract clauses providing for employment arbitration enforceable arbitration agreements? Many, if not most, of these “agreements” are imposed unilaterally upon employees as a pre-condition to employment. Their existence and content are generally non-negotiable. They thereby bear some of the essential characteristics of an adhesionary contract—which, under the express language of FAA Section Two, would render them unenforceable as contracts.

The issue of the contractual validity of employment arbitration agreements is related to the question of whether FAA Section One precludes arbitration altogether in most workplace environments. By its own terms, the FAA does not apply to the “contracts of employment of seamen, railroad employees, or any other class of workers engaged in foreign or interstate commerce.”