Arbitration Agreements: Common Place in Sports World, But Are They Good for the Common Employer?

If you follow sports news with any type of regularity, you probably can recall a dispute between a player and team which involved arbitration (i.e. Terrell Owens' dispute with the Philadelphia Eagles). Whether it is a dispute over how much money a team must pay a player or whether a team can suspend a player, the dispute is rarely played out in open court. Instead, the parties head to arbitration and have an arbitrator decide the merits. Recently a New Orleans Saints employee brought a lawsuit against the team alleging wrongful termination. The Saints invoked an arbitration clause in the employee's employment agreement and now the dispute will be decided by an arbitrator.

In the employment arena, arbitration clauses are becoming more common. This swing in favor of arbitration likely is driven by preconceived benefits of arbitration. Those preconceived benefits include: moderate costs ("potential" - see disadvantages below), expedited resolution, and confidentiality. While these preconceived benefits generally are true, an employer should keep in mind the disadvantages of arbitration. One disadvantage an employer needs to remember is that an employment arbitration generally requires the employer pay the arbitrator's fees for both parties. An arbitrator's fees can add up quickly in a contentious dispute. Another potential disadvantage is an arbitrator's propensity to "split the baby." This is not meant to be a slight on arbitrators, but the unfortunate truth is, arbitrators make money by repeat business. If the employee's lawyer does not like the outcome, that lawyer as well as other plaintiffs' lawyers will not select that arbitrator. Keep these advantages and disadvantages in mind as you evaluate whether to continue or begin using mandatory arbitration clauses in your employment agreements.

United States Supreme Court Issues Key Disparate Impact Ruling

Yesterday, the United States Supreme Court issued a key decision in a disparate impact case involving written exams in the City of Chicago firefighter application process. In a unanimous decision written by Justice Scalia, the Supreme Court discussed an issue of high importance to employers.

In 1995, the City of Chicago required all firefighter applicants take a written examination. The City announced in January 1996 that it would draw random candidates from the applicants that scored at least 89 out of 100 points. These applicants were designated as "well qualified." Applicants scoring between 65 and 88 were designated as "qualified" and were told they would be kept on an eligibility list. Any applicants that scored below 65 were informed they failed the exam and would not be considered for any firefighter positions. In March 1997, a group of black applicants that scored in the "qualified" range filed Charges of Discrimination with the EEOC and received Notices of Right to Sue. They ultimately filed suit and the lower court certified their lawsuit as a class action. The firefighters prevailed at the lower court level. On appeal, the Seventh Circuit reversed the lower court's decision and found the lawsuit was untimely because the earliest EEOC Charge of Discrimination was filed more than 300 days after the January 1996 decision to sort the test scores into three categories. The firefighters appealed to the Supreme Court.

As an initial matter (and as pointed out by Justice Scalia in the opinion), Title VII of the Civil Rights Act of 1964 prohibits employers from using practices (even if those practices are on their face non-discriminatory) that cause a disparate impact on the basis of race. Tests such as those at issue in this case are often the impetus for disparate impact cases. Title VII also requires plaintiffs to file a Charge of Discrimination within 300 days of the complained-of act prior to filing a lawsuit. The firefighters in this case argued that each time the City used the test scores to make a hiring decision, a new disparate impact cause of action accrued which began the 300 day deadline. The City argued the January 1996 decision to sort the scores was the only relevant date for disparate impact purposes and that each hiring decision thereafter was not a new discriminatory act because the City was only implementing the prior January 1996 decision.

The Supreme Court held that each hiring decision gave rise to a new disparate impact claim. The Court based this decision on the language in Title VII itself that states a plaintiff establishes a disparate impact claim when he or she shows an employer "uses a particular employment practice that causes a disparate impact." The Court said the City's exclusion of applicants (based on test scores) in each round of selection was a "use" as defined by Title VII. Thus, each hiring decision started the 300 day clock and the firefighters in this case timely filed Charges of Discrimination.

So what should employers take away from this key decision? It is important for any employer that utilizes tests and other similar employment practices that may create a disparate impact on its employees to constantly re-evaluate those practices and their impacts. An employer cannot avoid a lawsuit simply by relying on the fact the practice was implemented years ago. If an employer still makes decisions based on the practice at issue, each new decision gives rise to a potential cause of action. Employers, make sure your practices are sound and stay diligent and up to date.

The Forgotten Side Effect of a Troubled Economy - Lower Employee Morale

We recently read a fascinating article on MSNBC.com about the affect of corporate crises on employee morale. We will not recite the article here but certainly encourage you to read it if you are a business owner or find yourself in the management world with employee oversight and responsibility. The article reminds us of a company's most important asset - its employees. We here at The Coles Firm P.C. have highlighted the importance of employees and employee morale before but it never can be discussed too much.

As the article points out, when companies suffer economic, PR, or other crises, it is often the employees that are hardest hit. Unfortunately employees' troubles often are overlooked in favor of the more salacious media tidbits like crooked executives, insider trading, and coverups. What we often do not think about, though, are the front line employees that lose their jobs because the company must shut down or downsize or cut costs as a result of the crisis.

As the article points out, great companies have strong leaders who will focus on the company's employees and address the employees' concerns and fears directly, openly, and honestly. As a manager, you may not always have the answer an employee wants to hear but that does not mean you stick your head in the sand and avoid the issue. A fearful and uninformed employee is not a productive employee.

The amount of books and information about employee morale is staggering. You may feel there is a secret or a method you must use to have happy employees. That is just not true. There is no magic way to make happy employees. It's very simple. Treat your employees like they are your company's best asset. It does not matter how you do that (whether it be incentives, awards, recognition, an understanding of their issues, or a simple thank you). All that matters is that you do it. You will see your productivity increase and your business thrive.

Wal-Mart Takes a Hit on the Legal Front

If you have followed business news in the past week, you may have noticed some major developments in a class-action lawsuit against the world’s largest employer, Wal-Mart. On Monday, the 9th Circuit Court of Appeals voted 6-5, allowing a class-action lawsuit go to trial in what may potentially be the largest employment discrimination class-action suit ever. The crux of the lawsuit is whether Wal-Mart discriminates against its female employees by paying them less and limiting their opportunities for advancement. While the lawsuit began in 2001 with allegations from six women who worked in 13 of Wal-Mart’s 3,400 stores, the final class of litigants may well include every woman who has worked at Wal-Mart since 2001 – over 1.5 million women. Now that the appeals court has certified the class, Wal-Mart will likely challenge the decision at the Supreme Court. Let us know your thoughts on the potential impact of the 9th Circuit’s decision. Do you support a class-action lawsuit involving 1.5 million plaintiffs (as the plaintiffs’ attorneys have argued) or do you think plaintiffs should individually pursue claims at the specific Wal-Mart locations that employed them (as Wal-Mart has argued)? Is there a middle ground? We welcome your comments below.

UPDATE: Supreme Court Hears Arguments Regarding Workplace Privacy

At the end of last year we asked whether an employee should have an expectation of privacy regarding emails, text messages, etc. that were received and sent on company-owned equipment (previous post). The majority of reader responses favored the employers' right to monitor employees' communication. Luckily we should have an answer to this question from the Supreme Court in June. According to one report, the Justices appear to side with the employer. However, this same report indicated Chief Justice Roberts criticized the employer's decision to look at the text messages. Until June though, we can continue the right of privacy debate.

Coles Corner Winning Wine: April 2010 (Archive)

Lail Vineyards Blueprint 2008 Sauvignon Blanc - Lail's Blueprint Sauvignon Blanc is not the classic herbaceous Sauvignon Blanc. Don't look for over-the-top grassy notes. It offers an earthy nose that suggest a more intense wine, perhaps reminiscent of a Semillon. On the palette this wine has citrus notes combined with a slight hint of carbonation and still honors the Sauvignon Blanc grape and its traditional flavors.