Imagine a world where employers never have to deal with employee friendly juries and runaway damage awards.  By properly using mandatory arbitration clauses in employment contracts, employers may be able to prevent most employment discrimination claims from ever reaching hostile juries.

As more employers jump on the ADR (Alternative Dispute Resolution) bandwagon to deal with employment disputes, the courts are continuing to grapple with the legality of those efforts.  While the Federal courts around the nation send mixed signals as to whether agreements to arbitrate statutory employment claims are enforceable, the U.S. First Circuit Court of Appeals, which includes the District of Maine, recently ruled that an individual agreement to arbitrate is enforceable.

In Bercovitch v. Baldwin School Incorporated, the First Circuit ruled that a family¡¦s Americans With Disabilities Act (ADA) claims arising out of a private school¡¦s treatment of a student with attention deficit-hyperactivity disorder must be addressed through arbitration.

The parents took issue with the school when it suspended their child from the sixth grade for his disruptive behavior.  The school moved to dismiss the case and to compel arbitration on the grounds that, upon enrollment, the student¡¦s parents had agreed in writing to resolve disputes through ¡§final and binding¡¨ arbitration Act (FAA), ¡§ a contract evidencing a r transaction involving commerce to settle by arbitration a controversy thereafter arising out of such a contract¡Kshall be valid. Irrevocable, and enforceable.¡¨

The fact that the family¡¦s claims were bases on a civil rights statute did not transport them beyond the reach of the FAA, the Court said.  Furthermore, the ADA ¡§expressly encourages arbitration of disputes,¡¨ the Court noted, citing language from the statute encouraging ¡§the use of alternative means of dispute resolution, including¡Karbitration.¡¨ The Bercovitches made no claim that their agreement to arbitrate was somehow involuntary, and the Court found no evidence of unfairness in the agreement itself.

Even though this ruling arose out of an ADA claim relating to education rather then employment, the principles enunciated by the First Circuit will likely control employment claims in all the Federal courts in the circuit, including Maine¡¦s.

While a national consensus has not yet emerged regarding minimum requirements of a legally sound arbitration process, employees are more likely to challenge an employer¡¦s arbitration program if it does not provide:
„h a neutral arbitrator selected by both parties
„h more than minimal discovery (although discovery may be limited to a reasonable level that is somewhat less exhaustive than that required by judicial processes)
„h the same substantive relief as is available in court
„h a written decision
„h employer responsibility for the arbitrator¡¦s fees
„h payment of only reasonable expenses by the claimant.

Further litigation is brewing regarding the binding nature of mandatory arbitration provisions in collective bargaining agreements, where individuals, unlike the parents in the Bercovitch case, have not signed onto an arbitration agreement.  One commonly selected solution allows an individual to sue in Federal or State court if his or her union declines to arbitrate a claim.