EEOC (and Congress) Rolls Back ADR Policy

By Cai Phillips-Jones

A new U.S. Equal Employment Opportunity Commission rule affecting the agency’s conciliation process became effective Feb. 16, but was repealed via a Senate resolution last month. The May 19 Senate move signals “disapproval”; In order for the rule to be fully overturned, the House will have to vote on the joint resolution, and it must be signed into law by President Biden.

Passage is likely in House, where it awaits consideration. The conciliation process rule, devised under the Trump Administration, drew fire from Democrats because it required more information in early stages of discrimination complaints to be provided to employers, and critics said that could spark retaliations.  Republican supporters said the process supported settlements. See, e.g., Daniel Wiessner, “Senate votes to repeal EEOC settlement rule that ID’ed bias victims,” Reuters (May 19) (available at https://reut.rs/3wcIYCG).

Conciliation is a mediation-like process that aims to increase the speed at which EEOC complainants get relief. Conciliation is conducted by an EEOC investigator rather than a third-party mediator, and takes place after the agency has found evidence of discrimination.

The new rule required the EEOC to share the factual and legal basis of any findings of discrimination with employers about findings of discrimination during the conciliation process. The rule aims to increase the transparency of the conciliation process by providing the employer with more information about their potential liability.

The rule has been viewed as a rollback of the Supreme Court decision in Mach Mining v. EEOC, 575 U.S. 480 (2015) (available at https://bit.ly/2TmuMZg), which limited the amount of information employers received about EEOC discrimination findings.

The Senate vote to overturn the new conciliation rule is the latest example of EEOC rules changing since the Biden administration took office. In addition to this rule change, a conciliation pilot program was ended earlier than expected, in January. The pilot program made a small change to the existing EEOC program by mandating that settlement offers be shared with “appropriate levels of [EEOC] management” before being shared with the respondent.

In January, the EEOC also ended a mediation pilot program, which expanded the use of mediation to additional case types and during more phases of the EEOC administrative process. The mediation pilot program was announced on July 7, 2020, and was originally scheduled to run for six months, ending in January 2021. On Jan. 6, the pilot was extended until September, 2021. But the EEOC reversed course weeks later, and under new Biden Administration EEOC leadership, ended the program on Jan. 27.

In addition to expanding the availability of mediation, the pilot program also increased the use of video-conferencing mediation and electronic feedback from mediation participants. The video conferencing and electronic communication elements will be carried forward from the pilot program, as will the ability for parties to request a mediation at any point during the EEOC process.

It appears that the only major part of the pilot not being continued is the expansion of mediation to additional case types. EEOC cases are individually evaluated for referral to mediation. Some case types, however, including class and systemic charges, have historically been exempted from mediation referrals. During the pilot, these exemptions were suspended. The end of the pilot likely signifies a return to exempt status for these cases.

In the Jan. 27 press release terminating the previously extended pilot but noting the popularity and success of EEOC mediation, the new EEOC Chair, Charlotte A. Burrows, endorsed the continuing use of mediation and conciliation when appropriate. “I strongly support the prompt and voluntary resolution of discrimination charges whenever doing so is consistent with our mission,” she noted in a statement in the release, adding, “The Commission will continue to strengthen its conciliation and mediation programs in accordance with the overarching goal of preventing and remedying discrimination in the workplace.”

Burrows was critical of the pilot program’s implementation by predecessor chair Janet Dhillon. As an EEOC Commissioner last July, Burrows, noting that the program hurt the agency’s traditional enforcement role, said that Chair Dhillon “lacks authority to institute this sweeping change unilaterally, because it contradicts policy formally approved by a Commission vote.” See Paige Smith, “EEOC Alters Mediation Process Under New Temporary Program,” Bloomberg Law (July 7, 2020) (available here).

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The author, a J.D. student who will enter his third year this fall at Yeshiva University’s Benjamin N. Cardozo School of Law in New York, is a 2021 CPR Summer Intern.

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House Passes ‘PRO’ Act, Which Includes Arbitration Restrictions

By Mark Kantor

Yesterday, the proposed Protecting the Right to Organize Act (PRO Act) passed the U.S. House of Representatives by a 225-206 vote, with five Republicans voting Yay and one Democrat voting Nay.  The bill was sent to the U.S. Senate for consideration. 

While much arbitration-related attention in the new Congress has focused on the arbitration-only FAIR Act (for details and links, see Mark Kantor, “House Reintroduces a Proposal to Restrict Arbitration at a ‘Justice Restored’ Hearing,” CPR Speaks (Feb. 12) (available at http://bit.ly/3rze7y1)), the PRO Act contains significant provisions that, if finally enacted, would limit employment arbitration.

Most important, the PRO Act would make it an unfair labor practice for an employer to prevent employees requiring arbitration agreements that obligate an employee “not to pursue, bring, join, litigate, or support any kind of joint, class, or collective claim arising from or relating to the employment of such employee in any forum that, but for such agreement, is of competent jurisdiction.” 

Note that the coverage of the proposed PRO Act encompasses both employment contracts of adhesion and individually negotiated employment contracts, as well as covering individual independent contractors.  See Section 101(b) of the legislation at the act’s link above.

Section 104 of the PRO Act would override Epic Systems v. Lewis,138 S. Ct. 1612 (May 21)(available at https://bit.ly/2rWzAE8), with respect to employment arbitration and class proceedings. 

According to the accompanying section-by-section analysis released by the House, “ . . .  on May 21, 2018, the Supreme Court held in Epic Systems Corp. v. Lewis that … employers may force workers into signing arbitration agreements that waive the right to pursue work-related litigation jointly, collectively or in a class action. This section overturns that decision by explicitly stating that employers may not require employees to waive their right to collective and class action litigation, without regard to union status.”  (The analysis is available at https://bit.ly/2OGrKNj).

The ultimate Senate fate of the PRO Act is linked to the fate of the filibuster.  As Politico states:

But the Protecting the Right to Organize Act, which advanced mostly along party lines, is unlikely to win the 60 votes needed for passage in the narrowly controlled Senate. And already, some union leaders — who hold outsize sway in the Biden administration — are amping up pressure on Democrats to eliminate the filibuster so they can see one of their top priorities enacted.

Eleanor Mueller and Sarah Ferris, “House passes labor overhaul, pitting unions against the filibuster,” Politico (March 9) (available at http://politi.co/3vbgFEu). For the latest on the limited prospects for overturning the filibuster in the Senate, see Burgess Everett, “Anti-filibuster liberals face a Senate math problem,” Politico (March 9) (available at http://politi.co/2ObVou0). 

The filibuster affects large swaths of proposed legislation coming out of the House of Representatives and the Biden Administration agenda. We can anticipate daily media attention to every word any member of Congress or the administration speaks about the topic for some time to come.

The operative PRO Act text in Sec. 104 overriding Epic Systems reads as follows:

(e) Notwithstanding chapter 1 of title 9, United States Code (commonly known as the ‘Federal Arbitration Act’), or any other provision of law, it shall be an unfair labor practice under subsection (a)(1) for any employer—

“(1) to enter into or attempt to enforce any agreement, express or implied, whereby prior to a dispute to which the agreement applies, an employee undertakes or promises not to pursue, bring, join, litigate, or support any kind of joint, class, or collective claim arising from or relating to the employment of such employee in any forum that, but for such agreement, is of competent jurisdiction;

“(2) to coerce an employee into undertaking or promising not to pursue, bring, join, litigate, or support any kind of joint, class, or collective claim arising from or relating to the employment of such employee; or

“(3) to retaliate or threaten to retaliate against an employee for refusing to undertake or promise not to pursue, bring, join, litigate, or support any kind of joint, class, or collective claim arising from or relating to the employment of such employee: Provided, That any agreement that violates this subsection or results from a violation of this subsection shall be to such extent unenforceable and void: Provided further, That this subsection shall not apply to any agreement embodied in or expressly permitted by a contract between an employer and a labor organization.”;

Also, according to the proposal’s section-by-section analysis, PRO Act Section 109(c) would create a private right of action in U.S. federal court if the NLRB fails to pursue a retaliation claim.

(c) Private right to civil action.  If the NLRB does not seek an injunction to protect an employee within 60 days of filing a charge for retaliation against the employee’s right to join a union or engage in protected activity, that employee may bring a  civil  action  in  federal  district  court. The  district  court  may  award  relief  available  to employees who file a charge before the NLRB.

Yesterday’s hearings have gone viral via fiery words backing the act’s passage by Tim Ryan, D., Ohio, who chided Republicans for failing to support workers.  “Heaven forbid we pass something that’s going to help the damn workers in the United States of America!” shouted Ryan in the House chambers, adding, “Heaven forbid we tilt the balance that has been going in the wrong direction for 50 years!”

Republican opponents immediately fired back, saying that the bill would hurt workers by hurting business and the economy. For details, see Katie Shepherd, “Tim Ryan berates GOP over labor bill: ‘Stop talking about Dr. Seuss and start working with us,’” Washington Post (March 10) (available at http://wapo.st/3bz2YaF).

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Mark Kantor is a member of CPR-DR’s Panels of Distinguished Neutrals. Until he retired from Milbank, Tweed, Hadley & McCloy, he was a partner in the firm’s Corporate and Project Finance Groups. He currently serves as an arbitrator and mediator. He teaches as an Adjunct Professor at the Georgetown University Law Center (Recipient, Fahy Award for Outstanding Adjunct Professor). He also is Editor-in-Chief of the online journal Transnational Dispute Management. He is a frequent contributor to CPR Speaks, and this post originally was circulated to a private list serv and adapted with the author’s permission. Alternatives editor Russ Bleemer contributed to the research.

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Predispute Arbitration Would be Barred for Sex Harassment Claims Under Legislative Proposal

By Elena Gurevich

The Federal Arbitration Act is being targeted in Congress in a bill that seeks to ban predispute arbitration in matters involving sexual harassment.

Last month, Sen. Kirsten E. Gillibrand, D., N.Y., along with 13 co-sponsors., introduced U.S. Senate bill S-2203, titled “Ending Forced Arbitration of Sexual Harassment Act of 2017.”

The act makes predispute arbitration agreements unenforceable for sex discrimination disputes.  It would put the responsibility for determining arbitrability on courts, not arbitrators.

The Dec. 6 proposal was immediately referred to the Committee on Health, Education, Labor, and Pensions.  It was introduced in the House by Rep. Cheri Bustos, D. Ill., on Dec. 26, with seven co-sponsors, and sent to the Judiciary Committee.

The act would amend United States Code Title 9—the FAA—by adding a new Chapter 4 “Arbitration of Sex Discrimination Disputes” at the end.

In a proposed Section 401, the legislation would define “predispute arbitration agreement” as “any agreement to arbitrate a dispute that had not yet arisen at the time of the making of the agreement,” and “sex discrimination dispute” as “a dispute between an employer and employee arising out of conduct that would form the basis of a claim based on sex under title VII of the Civil Rights Act of 1964 [citation omitted] if the employment were employment by an employer [as defined in the act], regardless of whether a violation of such title VII is alleged.”

Proposed Section 402, on validity and enforceability, states that “no predispute arbitration agreement shall be valid or enforceable if it requires arbitration of a sex discrimination dispute.”

According to a blog by employment attorneys at the law firm of Orrick, Herrington & Sutcliffe, if the act is passed into law, it “would not make employment arbitration agreements altogether unenforceable.” Joe Liburt, Allison Riechert Giese and Akasha Perez, “The Ending Forced Arbitration of Sexual Harassment Act: A Legislative Response to #MeToo,” Orrick Employment Law and Litigation blog (Dec. 14) (available at http://bit.ly/2rmpHSx).

The blog post notes that the proposal “would require employers and employees to litigate sexual harassment claims, while leaving unaffected all other arbitration-eligible claims.  This could potentially require employees who bring both harassment and non-harassment legal claims to litigate some claims in court while simultaneously submitting other claims to arbitrators.”

The proposed law, however, does not prohibit workers and employers from agreeing to arbitration after a dispute arises.

The Orrick blog notes that the legislative proposal “has a long journey” before it is signed into law, explaining that “the bill must be assigned to a committee for consideration, withstand debate” and “pass a vote.” The blog post predicts that it “could take months or even years to complete, if ever.”

A USA Today article notes that Congress also “is wrestling with incidents of sexual harassment,” referring to a resolution passed by the Senate that requires sexual harassment training for senators and staff.

The article discusses a bipartisan bill that was introduced in November that would “overhaul the congressional complaint process and provide better protections for accusers.” The article also notes that “other lawmakers are looking to reform the secret process lawmakers have used to settle numerous workplace harassment and discrimination claims.” See Jessica Guynn, “‘Enough is enough’: Gretchen Carlson says bill ending arbitration would break silence in sexual harassment cases,” USA Today (Dec. 6)(available at https://usat.ly/2ynUM6y).

Some companies already have taken action in the light of the proposed legislation. Last month, Microsoft became the first Fortune 100 company to support the bill. Microsoft President and Chief Legal Officer, Brad Smith, stated that the company should “act immediately and not wait for a new law to be passed.” Brad Smith, “Microsoft endorses Senate bill to address sexual harassment,” Microsoft blog (Dec. 19)(available at http://bit.ly/2mR65jR).

The author is a CPR intern.