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EEOC Rescinds 1997 Policy Opposing Mandatory Arbitration
On December 17, 2019, the U.S. Equal Employment Opportunity Commission (EEOC) issued a press release announcing that it had rescinded a 22-year-old policy that strongly opposed the use of mandatory binding arbitration of employment discrimination claims. The EEOC first adopted the now rescinded policy, titled Policy Statement on Mandatory Binding Arbitration of Employment Discrimination Disputes as a Condition of Employment (Policy Statement), on July 10, 1997.
The EEOC stated that it rescinded the Policy Statement because it no longer reflects current law. Since 1997, the U.S. Supreme Court has issued numerous decisions that conflict with the Policy Statement. In particular, the Supreme Court has ruled that agreements to arbitrate employment-related disputes are enforceable under the Federal Arbitration Act (FAA) including, on several occasions, disputes involving allegations of employment discrimination or related federal labor and employment laws. The Supreme Court has also held that an arbitration agreement between an employer and an employee does not preclude the employee from filing a charge with the EEOC or bar the EEOC from pursuing victim-specific relief in litigation on behalf of the employee who files a timely charge of discrimination.
The press release concluded by stating EEOC staff will no longer rely upon the Policy Statement in investigations or litigation, but the rescission should not be “construed to limit the ability of the Commission or any other party to challenge the enforceability of a particular arbitration agreement.”
This rescission will have a negligible if any, the effect on employers because they have already been able to rely on U.S. Supreme Court precedent to support the lawfulness and enforceability of their employment arbitration agreements for federal employment discrimination claims.