On January 15, in EEOC v. Waffle House, Inc., the U.S. Supreme Court served up a decision in which it held that an agreement to arbitrate employment disputes between an employer and an employee does not bar the Equal Employment Opportunity Commission (“EEOC”) from bringing suit on its own and seeking victim-specific relief such as backpay, reinstatement and compensatory damages.  The Court reasoned that the statutory scheme covering EEOC’s enforcement powers does not support a finding that a private arbitration agreement materially changes the EEOC’s function or the remedies available to it.
In the underlying civil action, Eric Baker agreed in his employment application with Waffle House that any dispute or claim concerning his job would be settled by binding arbitration.  Two weeks after he started work, Baker suffered a seizure at work and Waffle House terminated his employment.  Baker did not initiate arbitration proceedings, but rather filed a discrimination charge with the EEOC alleging that his termination was a violation of the Americans with Disabilities Act (“ADA”).  Subsequently, the EEOC filed an enforcement action against Waffle House in federal court in which Baker was not a party.

In its decision, the Supreme Court reiterated that arbitration is a matter of consent, not coercion.  When the EEOC is not a party to the arbitration agreement, then it has not agreed to arbitrate its claims against the employer and will not be bound thereby.  Waffle House makes clear that an arbitration clause enforceable against a former employee will not preclude EEOC from bringing an action on that person’s behalf.  The Court did not consider the issue of whether a settlement, release or arbitration award for an employee would ultimately affect the validity of an EEOC’s claim (or the type of relief the EEOC may seek).  The Justices did, however, specifically state that courts can and should preclude double recovery by an individual.