Law profs take lead on Supreme Court case

Three UW Law School professors are spearheading an effort to defend the laws of several states that protect the right of employees to sue when their employers discriminate against or fire them.

Professors David Schwartz, Carin Clauss and James E. Jones, Jr., all specialists in labor and employment law, today, Sept. 19, filed a “friend of the court” brief with the U.S. Supreme Court in Circuit City Stores v. Adams.

Originating in Washington state, the Adams case challenges the Federal Arbitration Act, which overrides state laws protecting employees from being forced by their employers to give up their rights to go to court.

Several states, including Wisconsin, have laws that refuse to enforce arbitration agreements when employees are required to sign them as a condition of employment. An arbitration agreement waives the right to go to court and to a trial by jury, substituting instead a closed-door proceeding before a paid arbitrator.

Many employment law experts believe that employers gain a significant advantage in arbitration, while employees are better off pursuing their claims in court and before juries.

Increasing numbers of employers demand that new employees sign documents agreeing in advance to arbitrate any potential legal claims against the company. Those who refuse are told to look elsewhere for work. But once the arbitration agreement is signed, the employee no longer has the right to go to court for such claims as discrimination, sexual harassment, wrongful discharge and failure to pay wages.

“These ‘take-it-or-leave-it’ arbitration agreements are extremely unfair to individual employees,” says Schwartz. “It’s not like arbitration under a collective bargaining agreement, where the employee is backed up by a union. A person who needs a job is simply not in a position to say ‘no’ when the employer says ‘sign this or we won’t hire you.'”

Schwartz says Wisconsin long ago recognized the unfairness of imposing such arbitration agreements on individual employees. The Wisconsin Arbitration Act, passed by the state Legislature in 1931, says that while arbitration agreements will generally be enforced, they are void when employers make them with their employees.

“The Wisconsin approach to the arbitration issue is very sound,” says Schwartz.

However, a 1984 U.S. Supreme Court decision holds that the 1925 Federal Arbitration Act overrides state laws limiting enforcement of arbitration agreements. If the Supreme Court decides in the Adams case that the Federal Arbitration Act applies to employer-employee agreements, Wisconsin’s law will be nullified.

The UW professors’ brief argues that the Federal Arbitration Act should not apply to employment cases. Based on in-depth research into the legal history of the 1925 federal law, the professors argue that Congress never intended to override states’ ability to regulate employer-employee relations.

If their argument persuades the Supreme Court, states will be free to regulate employee-employer arbitration agreements as they see fit.

Schwartz, Clauss and Jones are joined in their effort by more than a dozen other law professors from around the country. A hearing on the case before the Supreme Court is likely to be scheduled in early winter. Because the professors have filed their brief as “friends of the court” (amici curiae in legal terms), rather than as attorneys for a party to the underlying dispute, they will not argue the case in court.