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Labor and Employment Lawnotes LABOR AND EMPLOYMENT LAW SECTION – STATE BAR OF MICHIGAN LABOR AND EMPLOYMENT LAWNOTES Volume 9, No. 2 Summer 1999 Each of these elements has a number of sub-requirements. In MICHIGAN order to avoid waiving “substantive rights” and “remedies”, the agreement must allow the same components of damages which the DISCRIMINATION CLAIMS: applicable statute permits (such as economic damages for wage and benefits loss, non-economic damages for emotional injuries, and TO ARBITRATE OR NOT TO attorney fees; in a claim under the federal civil rights statutes, it would presumably also have to include punitive damages in an ARBITRATE – THAT IS amount not less than the statutory “caps”). Additionally, the agree- ment cannot limit the employee’s right to seek administrative THE QUESTION relief through the MDCR or EEOC. Daniel B. Tukel In order to satisfy the “fairness” elements the court set forth a number of requirements which an arbitration agreement must con- Butzel Long, P.C. tain to be enforceable: In a dramatic about-face, a special panel of the Michigan Court 1. “Clear notice” to the employee that he is waiving the right of Appeals held that pre-dispute agreements which require manda- to file a lawsuit and is “opting instead to arbitrate” the claims. tory arbitration of statutory discrimination claims are enforceable, 2. The right of the employee to be represented by a lawyer. provided that certain requirements are met. The case is Rembert v Ryan’s Family Steak Houses (No. 196542, 4/9/99). An earlier 3. A “neutral” arbitrator. panel of the Court of Appeals held that such agreements are void 4. “Reasonable” pre-hearing “discovery,” which may include and unenforceable as a matter of public policy. Rushton v Meijers, depositions. 225 Mich App 156 (1997). 5. A “fair arbitral hearing,” which may include subpoenas and The Rembert court was a special conflict panel, convened pur- the right to “summon witnesses.” suant to MCR 7.215(H) to resolve the conflict between Rushton 6. A written arbitral award that contains “findings of fact and and the original Rembert decision. It was the special conflict conclusions of law.” panel which, in a 4-3 decision, held that an agreement requiring mandatory arbitration of statutory employment discrimination WILL THE FLOOD-GATES OPEN? claims — under the Elliott-Larsen Civil Rights Act and the Per- Under the current state of the law as set forth in Rembert, sons With Disabilities Civil Rights Act, formerly known as the employers now have a choice as to whether to require mandatory Handicappers Civil Rights Act — is “valid and enforceable” as long arbitration of employment claims, including statutory discrimination as “no rights or remedies accorded by the statute are waived” and claims. Separate from the question as to the legal enforceability of as long as “the procedure is fair.” Rembert means that an employer mandatory arbitration agreements, the question as to whether an can legally require “arbitration of claims as a condition of employ- employer should require arbitration remains open. ment,” provided that the agreement does not waive or diminish any substantive rights or remedies and contains “procedural safe- Some have predicted that Rembert will trigger a wave of guards” ensuring “fair procedures.” While Rembert involved employers instituting arbitration policies, in much the same way Michigan statutory claims and a non-union employee, its reason- that Toussaint triggered wholesale adoption of written “at will” ing applies equally to federal discrimination claims, and potentially acknowledgments. However, whether or not mandatory arbitration to employees covered by collective bargaining agreements, if provisions would be a boon to employers is not a clear-cut mat- such agreements contain arbitration provisions which indicate ter. There remain advantages and disadvantages to arbitration as that they are intended to apply to statutory claims and the arbitra- an alternative to litigation. Additionally, given that Rembert leaves tion procedures meet the Rembert requirements. a number of significant issues open, and therefore subject to judi- cial challenge, there are further questions as to whether such The Rembert Court held that a number of conditions must be agreements would offer employers significant short-term advan- met in order for an arbitration agreement to be valid. First, as a tages. This uncertainty makes it less likely that employers will threshold issue, “there must be a valid, binding contract covering immediately adopt, en masse, arbitration provisions. the civil rights claim.” If the arbitration agreement does not con- stitute a binding contract, it will not be enforceable regardless of ARBITRATION PROS AND CONS the procedures contained in the agreement. If the arbitration agree- The primary perceived advantage of arbitration is that it is gen- ment creates a valid contract, it must still meet several requirements erally thought to be a faster, less formal, and less costly process to be enforceable: than litigation. However, given the Rembert procedural requirements • it cannot waive “the substantive rights and remedies of the — reasonable discovery, right to counsel, calling of witnesses — statute,” including the right to damages; an arbitration in the post-Rembert workplace will be more quasi- judicial in nature. While arbitration may remain faster and less • the arbitration procedures must be “fair so that the employee expensive than litigation, the more closely an arbitration resembles may effectively vindicate his statutory rights.” (Continued on page 2) Page 2 LABOR AND EMPLOYMENT LAWNOTES (SUMMER 1999) MICHIGAN DISCRIMINATION CONTENTS CLAIMS: (Continued from page 1) Michigan Discrimination Claims: To Arbitrate Or Not To Arbitrate — That Is The Question . 1 civil litigation, the less likely it is to save substantial time or EEOC Compliance Manual On Retaliation . 3 expense. Another potential advantage with arbitration is that it is The Ethics Of Witness Preparation . 6 an arbitrator, who generally has experience in workplace dis- putes, who will decide the issue rather than a jury which might be Richard Nixon’s Supreme Court Argument . 8 more influenced by sympathies than by legal arguments or evidence. View From The Chair . 9 Additionally, arbitration offers a private setting, which may reduce Supreme Court Web Surfing Is “Relatively Straightforward” . 10 concerns about pursuing, or defending against, sensitive claims such FOIA And The NLRB . 12 as those involving sexual harassment. From an employer’s stand- point, an adverse arbitration decision does not involve a public judg- NLRB Practice And Procedure . 14 ment, which might more easily lend itself to being used against the Litigator’s Update . 14 employer in future claims by other employees. Sixth Circuit Busy But No Major Decisions . 15 There are several disadvantages, from an employer’s per- Eastern District Judges Confront ADA, Discrimination And spective, with arbitration as an alternative to litigation. First, FLSA Exemption Issues . 16 while claims may be decided more quickly, there is no ability to Internet Perspective On Employer Sexual Harassment Liability . 16 appeal an adverse decision. While a court can review for material Western District Judges Dismiss A Plethora Of legal error, it cannot simply substitute its judgment for that of the Discrimination Claims . 17 arbitrator. Additionally, while the chances for a significant award Michigan Supreme Court Reviews Workers’ Comp Cases . 17 of “front pay” (future economic damages) are reduced, the chances Michigan Court Of Appeals: Ruminations On Rembert; for the employee to be reinstated are significantly greater than in Deponents As Whistleblowers; Teacher Tenure litigation. Commission Appeals . 18 Moreover, because arbitration may be perceived as faster MERC Update . 19 and less costly, more employees might be inclined to file claims Supreme Court Narrows ADA, Frees States From FLSA And than would be the case with litigation. Arbitration may not permit Restricts Punitive Damages Under Title VII . 21 a mechanism for the employer to seek summary disposition of the The NLRB Continues To Issue Decisions At A Torrid Pace . 22 claim by motion, another fact which could encourage more The Joy Of Labor Law . 23 employees to file claims. Additionally, Rembert cited with approval a decision which stated that one of the reasons a particular arbi- STATEMENT OF EDITORIAL POLICY tration agreement was enforceable was because, as a “counter- Labor and Employment Lawnotes is a quarterly journal pub- weight” to reduced discovery, it provided that the arbitrator was lished under the auspices of the Council of the Labor and not bound by the rules of evidence. If the rules of evidence do not Employment Law Section of the State Bar of Michigan as a apply, a party may not be able to exclude irrelevant or unduly prej- service to Section members. Views expressed in articles and udicial evidence which would not, in litigation, be admissible. case commentaries are those of the authors, and not neces- Another potentially significant disadvantage with arbitration, sarily those of the Council, the Section or the State Bar. We at least in the short run, is that Rembert leaves a number of issues encourage Section members and others interested in labor and unresolved. An employer hoping to avoid litigation by instituting employment law to submit articles, letters and other material an arbitration provision may, therefore, still find itself in court, for possible publication. defending the contractual
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