EEOC Rescinds Policy Statement Disfavoring Arbitration Agreements

As part of its efforts to rescind outdated guidance on a rolling basis, the EEOC recently dispensed with a 22-year-old policy statement that disfavored mandatory arbitration agreements between employers and employees.

The EEOC previously took the position that mandatory arbitration agreements undermine the enforcement of federal anti-discrimination laws. The 1997 policy statement concluded that arbitration agreements permit employers to “exempt themselves from federal enforcement of civil rights laws” and “deprive civil rights claimants of the choice to vindicate their statutory rights in the courts.” The EEOC cited public policy concerns such as a lack of public accountability, limited opportunity for judicial review, and structural biases in the arbitral forum.

After the policy statement’s issuance, the Supreme Court held that employment-related arbitration agreements are enforceable under the Federal Arbitration Act (FAA). Circuit City Stores v. Adams, 532 U.S. 105 (2001). This ruling was followed by two decades of Supreme Court precedent endorsing arbitration agreements under the FAA and rejecting public policy concerns associated with mandatory arbitration.

In voting 2-1 to rescind the policy statement, the EEOC cited multiple Supreme Court decisions in labor and employment cases that conflict with its arbitration policy. Likewise, the EEOC noted several arbitration-related cases outside of the employment context that nevertheless “implicated” the positions in its policy statement.

While employees subject to mandatory arbitration may be deterred from filing a charge, it has little impact on their ability to bring claims before the EEOC. A claimant may file a charge of discrimination with the EEOC regardless of an enforceable arbitration agreement. Gilmer v. Interstate/Johnson Lane Corp., 500 U.S. 20, 28 (1991). Similarly, an arbitration agreement does not bar the EEOC from pursuing victim-specific relief on behalf of an employee. EEOC v. Waffle House, Inc., 534 U.S. 279 (2002). It is also important to note that in its rescission notice, the agency expressly retained its right to challenge an individual arbitration agreement (presumably, for example, if the EEOC felt a particular agreement went beyond the bounds of what is permissible under the FAA and federal case law).

The EEOC retracted this policy statement in what seems to be part of federal agencies’ larger efforts to scale back on rule-like guidance documents that did not go through the traditional notice-and-comment process. The full listing of retracted EEOC policy statements can be found here.

Information contained in this publication is intended for informational purposes only and does not constitute legal advice or opinion, nor is it a substitute for the professional judgment of an attorney.