In a recent decision that seems to implicitly overrule its prior position, the United States Supreme Court held that a collective-bargaining agreement that requires union members to arbitrate claims under the Age Discrimination in Employment Act (ADEA) is enforceable as a matter of federal law.

In 14 Penn Plaza, LLC v. Pyett, Service Employees International Union Local 32BJ and a multiemployer bargaining association for the New York City real-estate industry had executed a Collective Bargaining Agreement (CBA) that expressly required union members to submit all claims brought under federal discrimination statutes, including the ADEA, to binding arbitration. 

Several years ago, with the union's consent, a group of night watchmen were reassigned to lower paying positions.  The watchmen filed grievances, alleging age discrimination in violation of the ADEA.  After the initial arbitration hearing, the union withdrew the grievances from arbitration due to its previous consent to the reassignments.  The watchmen subsequently filed charges with the Equal Employment Opportunity Commission (EEOC), alleging that their employer and others had violated their rights under the ADEA, and then filed suit in federal district court.  The defendants in 14 Penn Plaza, LLC filed a motion to compel arbitration pursuant to the terms of the CBA, which was denied by the district court on the basis that “even a clear and unmistakable union-negotiated waiver of a right to litigate certain federal and state statutory claims in a judicial forum is unenforceable."

In affirming the district court’s decision, the Court of Appeals for the Second Circuit cited the 1974 United States Supreme Court decision of Alexander v. Gardner-Denver Co. for its holding "that a collective bargaining agreement could not waive covered workers' rights to a judicial forum for causes of action created by Congress."  In Gardner-Denver Co., the Supreme Court had allowed an African-American union member to both submit his claim for racial discrimination to arbitration and to file suit pursuant to Title VII in federal court.

The United State Supreme Court granted decided to resolve the split in opinion amongst the federal courts.  In a controversial 5-4 decision, the Supreme Court implicitly overruled its previous holding in Gardner-Denver, holding that the watchmen were bound by the CBA and were required to submit any claim arising under the ADEA to binding arbitration. 

The Supreme Court pointed out that the union was the exclusive representative of the watchmen pursuant to the National Labor Relations Act for purposes of collective bargaining with respect to conditions of employment and, consequently, had freely negotiated and agreed that employment-related discrimination claims, including claims brought under the ADEA, would be resolved in arbitration. 

Dismissing the watchmen’s argument that the arbitration clause was outside the permissible scope of the collective-bargaining process because it affected their individual, non-economic statutory rights, the Supreme Court stated that a union may agree to the inclusion of an arbitration provision in a collective-bargaining agreement in return for other concessions from the employer.  The Supreme Court also noted that there was no legal basis to strike down the arbitration clause as the plain language of the ADEA did not preclude arbitration of claims brought under the statute and that the agreement to arbitrate ADEA claims is not a waiver of a "substantive right", as that term is employed in the ADEA, as arbitration provides an effective remedy. 

The Supreme Court’s ruling expressed a strong preference for arbitration as a mechanism for resolving disputes arising under the federal discrimination statutes and was sharply dismissive of Gardner-Denver’s broad dicta that was highly critical of the use of arbitration for the vindication of statutory antidiscrimination rights, finding that such “skepticism . . . rested on a misconceived view of arbitration that this Court has since abandoned.” 

It is widely believed that Congress may act to reverse this controversial decision.