Supreme Court Upholds Mandatory Employer Arbitration

In a 5-4 ruling, the Court said that agreements requiring arbitration are enforceable, even if the employee had been forced to sign as a condition of employment. 

In the specific case (Circuit City Stores, Inc. v. Adams), the justices ruled that Saint Clair Adams, a gay former employee, could not sue over alleged harassment at work.

Singled Out

Despite a number of federal appeals court decisions in favor or employer-mandated arbitration, the Ninth US Circuit Court of Appeals disagreed in a 1999 decision, and refused to enforce Circuit City’s arbitration agreement.  The court held that the 1925 Federal Arbitration Act did not apply to employment or labor contracts of any kind. 

The Supreme Court ruled that the Act applied to all but transportation workers – and that the exception for those “engaged in commerce” should be read “plainly and narrowly.”  The Act makes commercial arbitration agreements enforceable in federal court.

Writing for the majority was Justice Anthony Kennedy, which also included Chief Justice William Rehnquist and Justices Antonin Scalia, Clarence Thomas and Sandra Day O’Connor.

Justice John Paul Stevens wrote the dissent, joined by Justices Ruth Bader Ginsburg and Stephen Breyer. Justice David Souter filed a separate dissent. 

– Nevin Adams        editors@plansponsor.com

The Court’s opinion is on its Web site .