EEOC Rescinds Policy Statement Objecting to Mandatory Arbitration Agreements

The EEOC has announced the rescission of a 1997 policy statement in which it objected to the use of agreements that required employees to resolve employment disputes solely through arbitration.

In 1997, the Equal Employment Opportunity Commission issued the Policy Statement on Mandatory Binding Arbitration of Employment Discrimination Disputes as a Condition of Employment, disfavoring the use of mandatory arbitration agreements. (Although such guidance is not law, it provides insight into the agency’s interpretation of the law and is often relied upon by employers and courts). Observing that, since that time, the U.S. Supreme Court has issued numerous arbitration cases affirming the use of such agreements, the EEOC has now rescinded the policy statement and directed that its staff should not rely upon it in investigation or litigation.

The policy statement had instructed EEOC staff to disregard the existence of such agreements in processing and investigating a charge, and even in bringing suit. The EEOC had also stated that it may challenge such agreements as violations of employment discrimination laws. Now, it appears that EEOC will not find such agreements necessarily a violation. However, there may be little impact with regard to charge processing, as the Supreme Court has recognized that an arbitration agreement does not preclude an employee’s ability to file an administrative charge. In addition, the EEOC may proceed with an investigation as to any suspected violation of the law and seek relief for the employee, regardless of such agreement, as the agency would not be a party to the agreement.