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High Court Rules EEOC Can Ignore Agreements Made Under Arbitration

By Charles Lane

The Supreme Court ruled Tuesday that the federal agency in charge of fighting job discrimination may sue an employer for alleged violations of an employee’s civil rights, seeking damages for an employee even when the employee has agreed to submit job disputes to arbitration.

By a vote of 6-3, the court held that a federal law designed to encourage arbitration as an alternative to litigation does not impinge on the Equal Employment Opportunity Commission’s authority to fight legal battles when employees claim on-the-job bias.

Writing for the court, Justice John Paul Stevens noted that the EEOC itself is not a party to the arbitration agreement at issue, and that nothing in federal law “authorizes a court to compel arbitration of any issues, or by any parties, that are not already covered in the agreement.”

Tuesday’s decision is especially important because it comes after a ruling last year in which the court said that an employee’s signature on a job contract containing an arbitration agreement waives the employee’s right to go to court on his or her own behalf.

Now, however, employers may still be deterred from illegal discrimination by the costly prospect of being taken to court by the EEOC. Under the ruling Tuesday, the EEOC will be able to seek not only a court order requiring an employer to stop any illegal activity, but also back pay, punitive damages and other individualized relief for a worker.

“Punitive damages benefit the individual employee (and) they also serve an obvious public function in deterring future violations,” Stevens noted.

The stakes in the case were high for employees-rights advocates, who feared that a ruling against the EEOC in this case, EEOC v. Waffle House, No. 99-1823, would have given employers an easy way to get around all but the mildest legal remedies for discrimination under federal civil rights law.

“This means the enforcement scheme of the civil rights statutes is still in place,” said Thomas Osbourne of the AARP Foundation, which filed a friend-of-the-court brief in support of the EEOC. “If it had gone the other way, you’d have enforcement of public law in private hands.”

In dissent, Justice Clarence Thomas, joined by Chief Justice William Rehnquist and Justice Antonin Scalia, said that the majority ruling “eviscerates (the employee’s) arbitration agreement with Waffle House and liberates (him) from the consequences of his agreement.”

Thomas, a former chairman of the EEOC, suggested that the ruling would give employees two chances to win money -- at arbitration and in an EEOC lawsuit -- a result, he said, that would undo much of what the court did in its decision last year.