In 2007, the Second Circuit held that a union contract cannot require an age discrimination plaintiff to arbitrate his dispute rather than proceed in Federal court. That decision, Pyett v. Pennsylvania Building Co., 498 F. 3d 88 (2d Cir. 2007), has been reversed by the Supreme Court.
The case is 14 Penn Plaza v. Pyett, decided on April 1. As Justice Thomas frames the issue, "The question presented by this case is whether a provision in a collective-bargaining agreement that clearly and unmistakably requires union members to arbitrate claims arising under the Age Discrimination in Employment Act of 1967 (ADEA)." Framing the question that way provides the answer. The answer is that the union, on the employees' behalf, can negotiate a union contract that requires the employees to arbitrate their age discrimination claims.
The Second Circuit had ruled that it could not compel arbitration because a prior Supreme Court ruling, Alexander v. Gardner-Denver, 415 U.S. 36 (1974), held "that a collective bargaining agreement could not waive covered workers’ rights to a judicial forum for causes of action created by Congress." The Court of Appeals also observed that Gardner-Denver was in tension with the Supreme Court's more recent decision, Gilmer v. Interstate/Johnson Lane Corp., 500 U. S. 20 (1991), which "held that an individual employee who had agreed individually to waive his right to a federal forum could be compelled to arbitrate a federal age discrimination claim."
In a 5-4 vote to sustain the mandatory arbitration provision, the Supreme Court noted that the labor union has authority to negotiate on the employee's behalf on pay and other "conditions of employment." The Supreme Court finds that the resolution of discrimination claims qualifies as a condition of employment under labor law. While the employees argued that "the arbitration clause here is outside the permissible scope of the collective-bargaining process because it affects" their "individual, non-economic statutory rights," the Court finds otherwise. Giving up the right to take your age discrimination case to court is part of the give and take between unions and management when they negotiate a contract, particularly since arbitration (in the Supreme Court's view) is seen as an efficient and less expensive means to resolve employment disputes.
Bolstering the Court's reasoning is its recent ruling in Gilmer v. Interstate/Johnson Lane Corp., 500 U. S. 20 (1991), which held that age discrimination claims are appropriate for arbitration. Gilmer has now been extended to collective bargaining agreements: "The Gilmer Court’s interpretation of the ADEA fully applies in the collective-bargaining context. Nothing in the law suggests a distinction between the status of arbitration agreements signed by an individual employee and those agreed to by a union representative."
In dissent, Justice Souter states that the Supreme Court's ruling undercuts the precedential value of Gardner-Denver, and that "The majority evades the precedent of Gardner-Denver as long as it can simply by ignoring it."