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3rd Circuit: Arbitration 'conscientious objectors' allowed to sue

When it comes to resolving employment-related disputes, many companies have determined that a resolution in arbitration is desirable. Ideally, arbitration is less expensive and more final. It gives the employee an opportunity to have grievances heard by someone other than management, and it gives the company a more private resolution without the risk of negative publicity.

Employees sometimes feel that arbitration is not in their best interest, however. For example, if a large group of workers has the same complaint, it would be more costly for each one to bring a separate complaint to an arbitrator than it would be to file a class-action lawsuit. Moreover, arbitrators may not always resolve similar complaints the same way, which could lead to different outcomes for essentially the same problems. Also, in employment disputes in particular, the Equal Employment Opportunity Commission has the power to issue orders and obtain consent decrees, which individuals may not be able to obtain though arbitration.

Even when workers have their doubts about arbitration, they often don’t have much choice. When disputes arise, many employees discover that they agreed to arbitration when they signed their hiring paperwork. When a company policy requiring arbitration is put into place later on, workers may be given only two options: agree to arbitration or quit.

There is one small class of employees with some wiggle room, however, according to a recent decision by the Third Circuit Court of Appeals, which covers Pennsylvania. The issue was whether, after objecting to an arbitration requirement, the employee’s continuing to work can always be considered consent to the policy. In certain cases, the Third Circuit says it can’t be.

The case involved two former assistant directors of admissions at Education Management, a subsidiary of the Art Institute of Pittsburgh. When they received what seemed like unjustly negative performance reviews, they filed a complaint with the EEOC alleging age discrimination and, in one case, possible race discrimination. The trial court dismissed their claims, saying that claims before the EEOC were covered by Education Management’s arbitration policy — and that their continuing to work there after the policy was implemented was legally considered consent to that policy.

The appeals court disagreed. Since the men had voiced their objections to the policy, it wasn’t fair for the employer — or the lower court — to assume they had consented. Education Management should have protected its rights by immediately terminating any employee who objected to the policy.

In other words, at least when it comes to employment arbitration in the Third Circuit, your silence may be taken as consent, but your vocal objections can’t be.

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