A Florida company that owns
franchise restaurants, such as Applebee’s and Panera Bread, has been sued by
the Equal Employment Opportunity Commission (“EEOC”) for making its employees
sign mandatory arbitration agreements.
The lawsuit, filed September 18, 2014 in the U.S. District Court for the
Southern District of Florida, is the latest instance of the EEOC targeting employer
practices which the agency views as
limiting employees’ right to file charges of discrimination or bring lawsuits
under Title VII and other employment discrimination statutes.
According to the agency’s allegations in EEOC v. Doherty Enterprises, Inc. (Civil
Action No. 9:14-cv-81184-KAM), the company “requires each prospective employee
to sign a mandatory arbitration agreement as
a condition of employment. The
agreement mandates that all
employment-related claims -- which would otherwise allow resort to the EEOC -- shall be submitted to
and determined exclusively by binding
arbitration.” The EEOC alleges the
arbitration agreements interfere with employees' rights to file discrimination
charges and “violates Section 707 of Title VII of the Civil Rights Act of 1964, which prohibits employer
conduct that constitutes a pattern or
practice of resistance to the rights protected by Title VII.
The lawsuit is not surprising since the EEOC made it
clear in its 2013 – 2016 Strategic Enforcement Plan that “[t]he EEOC will target policies and
practices that discourage or prohibit individuals from exercising their rights
under employment discrimination statutes, or that impede the EEOC's
investigative or enforcement efforts.”
However, while these type of “test” cases by the agency result in
substantial legal costs for employers, the EEOC does not seem to have been
getting much bang for its buck when it actually gets in front of a federal
judge.
As
noted in my September 21, 2014 posting, “EEOC Experiences “Separation Anxiety”in Lawsuit Against CVS”, last week the EEOC suffered a big defeat in
their controversial lawsuit against CVS Pharmacy, over the drug store chain’s
use of separation agreements for departing employees. In that lawsuit, the EEOC had taken the same approach
as it has in this latest case, alleging the drug store chain’s use of very
standardized separation agreements demonstrated a pattern and practice of CVS interfering
with employees' Title VII in a way that “deters the filing of charges and
interferes with employees' ability to communicate voluntarily with the EEOC.”
In comments about the agency’s lawsuit against Doherty
Enterprises, EEOC Regional Counsel Robert E. Weisberg left little doubt that
more lawsuits over arbitration agreements can be expected:
"Employee communication with
the EEOC is integral to the agency's mission
of eradicating employment discrimination.
When an employer forces all complaints about employment discrimination into confidential
arbitration, it shields itself from
federal oversight of its employment practices. This practice violates the law, and the EEOC
will take action to deter further use of these types of overly broad
arbitration agreements."
As was the case of separation agreements in the CVS lawsuit, mediation agreements are commonly used by employers nationwide, and the EEOC’s litigation focus is troubling to the business community. For employers who utilize arbitration agreements, it would be advisable to have them reviewed by legal counsel.
