By: Dominic Charles

On June 23, 2023, Starbucks Workers United (Union) announced that 3,500 workers would strike in retaliation to Starbucks’ corporate policy ordering stores to remove all LGBTQ+ decorations. The Union’s concern over the needs of its LGBTQ+ members reflects a diversifying union workforce in which two-thirds of workers are women and/or people of color. As Union negotiators bargain for their collective bargaining agreements (“CBA”), they should remain mindful of their union’s diversity, particularly when negotiating the arbitration clause. CBA arbitration clauses typically mandate that any controversy relating to the term of a contract be settled in arbitration. The clause can also mandate that an employee’s individual employment claims must also be settled in arbitration. In 14 Penn Plaza v. Pyett, the Supreme Court enabled unionized workers to waive their right to litigate violations of statutorily protected individual rights like protection from race discrimination or a hostile work environment, through collectively bargained for arbitration clauses. Since CBA arbitration clauses can mandate that individual unionized workers waive their right to a courtroom appearance, union negotiators should extract a high price for those types of CBA arbitration clauses. 

The Supreme Court strengthened CBA arbitration clauses through a series of decisions known as the Steelworkers Trilogy. The Steelworkers Trilogy established the principle of judicial deference to an arbitrator’s decisions, rendering it nearly impossible to challenge arbitrator decisions in federal court. In United Steelworkers v. American Manufacturing Co., the first case in the trilogy,the employer claimed they were not required to arbitrate because the employee agreed to a settlement. The Supreme Court disagreed, ruling that arbitration was required because the parties were disputing “the meaning, interpretation and application of the collective bargaining agreement. The Court emphasized that the clause was integral to the CBA because it was the quid pro quo for the Union’s agreement to the CBA’s no-strike clause. In other words, management provided the arbitration clause in exchange for the union’s promise not to strike during the contract. The Supreme Court in United Steelworkers v. Warrior & Gulf Navigation Co. reiterated the importance of CBA arbitration clauses saying that arbitration serves as “the substitute for industrial strife,” and that an order to arbitrate should not be denied as the arbitration clause covers the dispute. In the final installment of the Steelworkers Trilogy, the employer challenged the outcome of an arbitration award based on ambiguity. The court agreed with the employer but ruled that “a mere ambiguity” in the arbitrator’s opinion does not justify the denial of an award. 

The Steelworkers trilogy established arbitration as the preeminent authority in solving labor disputes while still leaving unanswered questions surrounding the litigation of individual employment claims. In Wright v. Universal Maritime Service Corp., decided in 1998, the Supreme Court rejected the rule that individual employment rights granted to workers by Title VII of the Civil Rights Act “can form no part of the collective-bargaining process for a rule that stated a waiver would be valid if the arbitration clause clearly and unmistakably stated that individual statutory claims applied to it.” The Court’s decision in Wright meant that unionized workers could waive their right to litigate individual employment claims in court via a collectively bargained-for arbitration clause.  The Penn Plaza decision in 2008 cemented the Wright rule.  Relying on the Steelworkers Trilogy, the Supreme Court ruled that a collectively bargained-for agreement to arbitrate individual employment discrimination claims functions no differently than other arbitration agreements that serve as a quid pro quo for another term in the agreement. 

A new demographically diverse generation is leading the United States labor market’s resurgence.  This generation’s diversity means negotiators need to pay closer attention to collectively bargained-for arbitration clauses[.]

Dominic Charles

The inclusion of mandatory arbitration clauses endorsed by Penn Plaza can be costly for both individual employees and the union. Arbitration clauses deny individual employees a jury trial, robust discovery, and shield the employer from public scrutiny. These clauses also carry potential risks of internal strife within the union. Importantly, mandatory arbitration clauses also place the responsibility of litigating an employee’s individual race, gender, and/or age discrimination case in the hands of the union, and employees may feel that their union cannot zealously represent them in such personal matters. In sum, Penn Plaza arbitration clauses present significant issues, and guaranteeing ratification by the rank and file may require Union leadership to extract a price for inclusion of such clauses in the final CBA. 

A new demographically diverse generation is leading the United States labor market’s resurgence.  This generation’s diversity means negotiators need to pay closer attention to collectively bargained-for arbitration clauses that cover individual employment claims, as these clauses foreclose the possibility of an individual employee filing suit against an employer who violates their civil rights. Employment arbitration clauses leave any possible recourse for a violation of individual civil rights in the hands of union leadership meaning negotiators should extract a high price for the inclusion of such clauses into a final CBA.