Mandatory arbitration agreements can reduce litigation. However, for at least one large employer, the arbitration agreement itself has created litigation. Last week, the EEOC sued restaurant franchise operator, Doherty Enterprises, Inc. claiming that the company’s practice of requiring employees to sign a mandatory arbitration agreement violates Title VII. Doherty operates Applebee’s restaurants in New York, New Jersey, Florida and Georgia. So, why is an agreement designed to avoid court now the subject of a court lawsuit? The language in the Doherty Arbitration Agreement is fairly standard for employers who require employees to arbitrate their employment disputes. Yet, the EEOC says that Doherty’s Arbitration Agreement violates Title VII because it interferes with the employees’ right to file a charge with the EEOC and participate in EEOC proceedings.
This is not the first time the EEOC has said that any agreement – whether in the form of an arbitration agreement, settlement agreement or some other agreement – that interferes with an employee’s (or former employee) ability to file an EEOC Charge or participate in an EEOC investigation is unlawful. After all, the EEOC has made clear that filing a charge of discrimination is a right guaranteed by Title VII and it cannot be waived by an agreement between the employer and its employee. Many employers have modified the language in their agreements to carve out the employee’s right to file an EEOC Charge or participate in an EEOC investigation but apparently Doherty had not.
The takeaway — review your agreements and consider including clear language that carves out an employee’s ability to file an EEOC Charge, communicate with the EEOC and participate in an EEOC investigation. If not, you may find yourself in the very same court you sought to avoid.