Supreme Court Issues Four Decisions Favorable to Employers

On June 24, the Supreme Court issued a decision in the Vance v. Ball State
University case that clarified and narrowed the definition of “supervisor” for purposes of a harassment lawsuit brought under Title VII of the Civil Rights Act of 1964. This decision makes it more difficult for an employee to prove that an alleged harasser is a “supervisor” and, thus, more difficult for an employee to show that his or her employer is vicariously liable for harassment.

The plaintiff in Vance, an African-American employee of a university, alleged that a Caucasian employee harassed her because of her race, and that the university was liable under Title VII. The plaintiff was a “catering assistant” working in the university's Banquet and Catering Division, and the alleged harasser was a “catering specialist” working in the same division. The parties disputed the exact scope of the alleged harasser's authority over the plaintiff, but they agreed that the alleged harasser did not have power to hire, fire, demote, promote or discipline the plaintiff.

The district court awarded summary judgment in favor of the employer because the alleged harasser was not a “supervisor,” and, applying the Faragher/Ellerth defense applicable to co-employee harassment cases, held that the university reasonably responded to the incidents of harassment of which it was aware. The Seventh Circuit Court of Appeals and the Supreme Court affirmed.

In its decision, the Supreme Court reaffirmed that an employer can be vicariously liable for an employee's unlawful harassment only when the employee is a “supervisor.” Further, relying on its own precedent and principles of agency, the Court held that an employee is a “supervisor” in a Title VII retaliation case if he or she is empowered by the employer to take tangible employment actions against the victim, such as hiring, firing or demoting. In doing so, the Supreme Court rejected the definition established by the Equal Employment Opportunity Commission (EEOC) and certain courts, which would include as supervisors employees with authority merely to assign, to reward, to direct employees or to recommend tangible employment actions. Under the EEOC's definition, many “first-line supervisors,” “assistant managers,” or “lead” workers would qualify as supervisors for purposes of Title VII harassment claims. But thanks to the Vance decision, employees will have a more difficult time proving that an alleged harasser is a supervisor whose actions expose a company to vicarious liability.

Although the Vance decision is a positive development for employers overall, it reminds us how easy it is for an employee to make a costly claim against your company if he is subjected to harassment by an employee who qualifies as a supervisor. Accordingly, companies should work with experienced counsel to delineate which positions have authority to take tangible employment actions (as evidenced by clear, written job descriptions), to establish and implement effective, up-to-date harassment policies, and to conduct regular training for their supervisors in order to minimize the risk of direct liability for harassment.'

Standard for Proving 'Causation' Heightened in Retaliation Cases

Retaliation claims against employers are on the rise. Every year since 2010, the EEOC has received more complaints based on retaliation than on any type of discrimination, such as that involving race or gender. For employers, one of the most important issues in every retaliation case is causation. Companies regularly defend themselves by arguing that the complaining employee failed to prove that an adverse employment action (e.g., discharge or suspension) was caused by some kind of action by the employee that is
protected by law (e.g., reporting unlawful harassment or filing an EEOC Charge).

Over the years, federal courts have disagreed about the standard of proof for retaliation claims under Title VII. Some courts required plaintiffs to prove that the employer would not have taken the adverse employment action but for the plaintiff's protected activity. Other courts used a standard more easily met by employees, which required proof that the improper motive was just one of the reasons behind the adverse employment action.'

On June 24, the U.S. Supreme Court clarified the type of proof required for a plaintiff to establish a retaliation claim under Title VII in University of Texas Southwestern Medical Center v. Nassar. The Court held that a plaintiff must prove that the unlawful retaliation was the “but-for” cause of the challenged employment action, not simply a “motivating factor” for the employment action. In other words, to succeed on a Title VII retaliation claim, a plaintiff must prove that he would not have suffered an adverse employment action if he had not engaged in the protected activity.

In Nassar, a physician of Middle Eastern descent complained to his employer that a supervisor harassed him based on his religion and ethnic heritage. Ultimately, a university affiliated with the employer denied the physician a permanent position, and he filed a lawsuit claiming that he experienced retaliation for filing a discrimination complaint, and also that he was subjected to race and religion discrimination. A jury found in favor of the physician on these claims, and the U.S. Fifth Circuit Court of Appeals affirmed the judgment on the retaliation claim because the physician had proved that retaliation was a “motivating factor” in the decision to deny the physician a permanent position.'

The Supreme Court reversed the Fifth Circuit's decision, holding that the more burdensome “but-for” standard of causation was the appropriate test for causation in Title VII retaliation cases. The Court reasoned that Title VII's anti-retaliation provision, which prohibits employers from taking adverse employment action “because of” certain criteria, is similar to language found in the section of the Age Discrimination in Employment Act (ADEA) that prohibits age discrimination. Because the Court recently held in Gross v. FBL Financial Services, Inc. that the appropriate standard for proving age discrimination under the ADEA was the “but-for” standard, the Court concluded that Title VII called for the same test of causation.

The Court's decision in Nassar is helpful for employers because it raises an employee's burden for proving causation in retaliation cases, and courts now are more likely to dismiss such claims at the dispositive-motion stage. However, this decision does not necessarily mean that the recent spike in retaliation claims will plateau. Employers should continue to ensure that their Equal Employment Opportunity policies have effective anti-retaliation provisions, that managers receive regular training regarding these policies, and that employee complaints of discrimination are kept confidential.

Potential Defense Against FLSA Collective Actions Recognized

Just like retaliation claims, the number of claims brought under the Fair Labor Standards Act (the Federal law that guarantees non-exempt employees the right to a minimum wage and overtime wages) has increased dramatically in recent years. This increase can be attribtuted primarily to two causes. First, plaintiffs' attorneys have begun aggressively pursuing potential wage claims because the FLSA allows successful plaintiffs to collect their attorneys' fees. Second, the FLSA provides similarly situated employees a right to bring a “collective action” against an employer through a procedure that is simpler and less burdensome than pursuing a “class action” under Federal Rule of Civil Procedure 23. Fortunately, the U.S. Supreme Court recently issued a decision that offers employers a potential defense against collective actions that are initiated by a single plaintiff.

Genesis HealthCare Corporation v. Symczyk was initiated when a registered nurse employed by a Pennsylvania health care center filed a “collective action” lawsuit alleging
that her employer violated the FLSA by automatically deducting 30 minutes per shift for meal breaks, regardless of whether the employee actually took the whole break. Upon answering the complaint, the employer simultaneously served on the plaintiff a settlement offer that included the full amount of unpaid wages as well as attorneys' fees and costs. Notably though, the offer included an express stipulation that it would expire if not accepted within 10 days. When the plaintiff did not accept the offer 10 days later, the employer moved to dismiss the case.

The district court dismissed the suit, concluding that the settlement offer made by the employer fully satisfied the nurse's claim and left her with no remaining interest in the suit. Because no other employee had joined the collective action as a plaintiff, the lawsuit was no longer justifiable. The Third Circuit Court of Appeals reversed the decision because it would “frustrate the goals of [FLSA] collective actions,” although it agreed with the effect of a settlement offer on the nurse's claim.

In a decision issued on April 16, the Supreme Court reversed the Third Circuit and held the suit had been appropriately dismissed. The Court reasoned that the plaintiff's individual action could no longer proceed since the intervening settlement offer effectively “deprive[d] the plaintiff of a 'personal stake in the outcome of the lawsuit.'” The Court then examined whether the lawsuit could remain based on the collective-action allegations in her complaint, and it decided the action must be dismissed since no other employees opted in and “the mere presence of collective-action allegations in the complaint cannot save the suit” after a settlement offer satisfies the individual plaintiff's claim.

Based on the Court's decision in Genesis Healthcare, companies now have a choice when they are served with an FLSA collective-action lawsuit filed by a single plaintiff ' or potentially a small number of plaintiffs. Rather than defend the lawsuit as it would any other, which may increase the chances that the plaintiff will convince his or her coworkers to join the lawsuit as additional plaintiffs, they can pay the plaintiff what he claims he is owed, plus attorneys' fees and other costs allowed by the FLSA, and move to dismiss the case. Whether the latter option is a cost-effective way of resolving an FLSA collective action depends on many factors including the amount claimed by the plaintiff(s), the potential number of employees who may join the lawsuit as plaintiffs in the future, and the risk that a court ultimately will find that the employer violated the FLSA. However, under the right circumstances, it may be a strategy that saves the company substantial time and expense.

Class Waiver in Arbitration Agreement Held Enforceable (Again)

For many years, companies have tried to minimize the high cost and burden of litigation by using arbitration agreements to limit instances when they can be sued in state or federal court.' In light of the recent increase in “class actions,” which typically are even more expensive and burdensome, companies have included in arbitration agreements a waiver of the right to pursue a “class action” through arbitration. The purpose of these waivers is to prevent individuals and other corporate entities from initiating or joining class actions against them in any forum ' either in court or through the arbitration process. Critics of such agreements claim that class waivers are unenforceable because they unfairly deny individuals, including employees, and small businesses an opportunity to join with others similarly situated in a single class action arbitration that is less expensive and easier to maintain than individual arbitration claims.

In June, the U.S. Supreme Court issued its latest decision in cases challenging the enforceability of class waivers in arbitration agreements, and a divided Court once again ruled in favor of a larger company by enforcing an arbitration agreement as written. In American Express Co. v. Italian Colors Restaurant, et al., a group of retail merchants filed a class action lawsuit against American Express claiming that the company used its “monopoly power” in the market for charge cards by forcing merchants to accept credit cards at rates approximately 30% higher than fees for competing credit cards in violation of federal antitrust laws. American Express filed a motion to compel the merchants to pursue their claim through individual arbitrations pursuant to the Federal Arbitration Act (FAA) and the clear terms of the arbitration agreement, which stated, “[t]here shall be no right or authority for any Claims to be arbitrated on a class action basis.” In opposition, the merchants argued that the class waiver was unenforceable, since the cost of the expert analysis needed to prove their antitrust claims far exceeded the amount that any individual merchant could recover.'

In a 5-3 decision, the Supreme Court ruled that the class waiver in American Express's arbitration agreement was enforceable, thus preventing the merchants from pursuing a class action against the company in arbitration or in court. Consistent with other recent decisions interpreting the FAA, the Court held that arbitration is a matter of contract, and courts must “rigorously enforce” arbitration agreements according to their terms. Because the arbitration agreement was a valid contract, and no other statutory or judge-made exception applied, the Court found that it was required to enforce the agreement as written. The Court rejected the theory that the class waiver was unenforceable based on the relatively high cost of pursuing individual claims. According to the Court, a ruling to the contrary would defeat the purpose of arbitration because, before a claim could be arbitrated, courts may be required to determine and compare the cost of developing a party's evidence with the amount of its potential recovery.

Although the American Express case did not involve an issue of employment law specifically, it is highly significant for the increasing number of employers who ask employees to sign arbitration agreements limiting their rights to pursue legal action against the company. Consistent with other decisions involving class waivers, including AT&T Mobility, LLC v. Concepcion and Gilmer v. Interstate/Johnson Lane Corp., which upheld arbitration agreements with similar class waivers, the Supreme Court apparently remains willing to enforce arbitration agreements by which individuals, including employees, waive their rights to pursue claims collectively against companies.'

Employers should not, however, view arbitration agreements with broad waivers as a “silver bullet” for dispensing with employment disputes. Companies should consult experienced counsel when using arbitration agreements because courts will not enforce provisions that violate federal laws (e.g., by violating employees' rights to engage in concerted activity under federal labor laws or by prohibiting employees from filing EEOC charges), or, as recognized in Justice Thomas's concurring opinion in the American Express case, agreements that lack the basic elements of contract formation, such as an absence of consideration or proper consent.

Further, employers should be aware that arbitration can be as expensive and inefficient as some court proceedings, and there is no guarantee that an arbitrator will issue a more favorable opinion than a judge or jury. In fact, parties typically are required to agree on a mutually acceptable arbitrator, and many arbitrators have a tendency to “split the baby” by issuing a decision that affords each side some relief, regardless of the strength of a company's case.

E. Fredrick Preis, Jr., Joseph R. Hugg, and Rachael Jeanfreau are attorneys in the Labor & Employment Section of the Breazeale, Sachse & Wilson law firm, which represents management. Reach them at [email protected], [email protected], and [email protected], respectively.

The U.S. Supreme Court issued four decisions in 2013 involving important questions of employment law that are being widely praised by corporate attorneys for their “pro-employer” rulings. Companies should be aware of these decisions so that they can take advantage of the potential defenses they offer. However, these decisions do not change the fundamental rules of employment law or the importance of maintaining an effective employee relations program. Companies must remain vigilant to ensure that their interests are protected.

Every company that has defended itself against a harassment claim under employment discrimination laws understands that dealing with harassment allegations is time-consuming, expensive, and, at a minimum, unpleasant for all employees involved.' Further, a company sued for harassment also may be exposed to bad press and an expensive settlement or a large court judgment. Fortunately, a recent Supreme Court decision has made it a little easier to defend your company against harassment allegations under federal employment discrimination laws.

One of the most important issues in any harassment case is whether an alleged harasser is a “supervisor.” This is because the legal standards are different if the alleged harassment is committed by a supervisor or a co-employee. Pursuant to well-established Supreme Court precedent, it is much easier for an employee to obtain a judgment against a company if he or she was harassed by a supervisor because a company is “vicariously liable” (i.e., directly liable) for harassment committed by a supervisor. By contrast, when a non-supervisory co-employee is responsible for the alleged harassment, the company cannot be directly liable and can avoid exposure by asserting the so-called Faragher/Ellerth defense by showing that it exercised reasonable care to prevent and correct any harassment ' usually by implementing and following a well-drafted anti-harassment policy.

On June 24, the Supreme Court issued a decision in the Vance v. Ball State
University case that clarified and narrowed the definition of “supervisor” for purposes of a harassment lawsuit brought under Title VII of the Civil Rights Act of 1964. This decision makes it more difficult for an employee to prove that an alleged harasser is a “supervisor” and, thus, more difficult for an employee to show that his or her employer is vicariously liable for harassment.

The plaintiff in Vance, an African-American employee of a university, alleged that a Caucasian employee harassed her because of her race, and that the university was liable under Title VII. The plaintiff was a “catering assistant” working in the university's Banquet and Catering Division, and the alleged harasser was a “catering specialist” working in the same division. The parties disputed the exact scope of the alleged harasser's authority over the plaintiff, but they agreed that the alleged harasser did not have power to hire, fire, demote, promote or discipline the plaintiff.

The district court awarded summary judgment in favor of the employer because the alleged harasser was not a “supervisor,” and, applying the Faragher/Ellerth defense applicable to co-employee harassment cases, held that the university reasonably responded to the incidents of harassment of which it was aware. The Seventh Circuit Court of Appeals and the Supreme Court affirmed.

In its decision, the Supreme Court reaffirmed that an employer can be vicariously liable for an employee's unlawful harassment only when the employee is a “supervisor.” Further, relying on its own precedent and principles of agency, the Court held that an employee is a “supervisor” in a Title VII retaliation case if he or she is empowered by the employer to take tangible employment actions against the victim, such as hiring, firing or demoting. In doing so, the Supreme Court rejected the definition established by the Equal Employment Opportunity Commission (EEOC) and certain courts, which would include as supervisors employees with authority merely to assign, to reward, to direct employees or to recommend tangible employment actions. Under the EEOC's definition, many “first-line supervisors,” “assistant managers,” or “lead” workers would qualify as supervisors for purposes of Title VII harassment claims. But thanks to the Vance decision, employees will have a more difficult time proving that an alleged harasser is a supervisor whose actions expose a company to vicarious liability.

Although the Vance decision is a positive development for employers overall, it reminds us how easy it is for an employee to make a costly claim against your company if he is subjected to harassment by an employee who qualifies as a supervisor. Accordingly, companies should work with experienced counsel to delineate which positions have authority to take tangible employment actions (as evidenced by clear, written job descriptions), to establish and implement effective, up-to-date harassment policies, and to conduct regular training for their supervisors in order to minimize the risk of direct liability for harassment.'

Standard for Proving 'Causation' Heightened in Retaliation Cases

Retaliation claims against employers are on the rise. Every year since 2010, the EEOC has received more complaints based on retaliation than on any type of discrimination, such as that involving race or gender. For employers, one of the most important issues in every retaliation case is causation. Companies regularly defend themselves by arguing that the complaining employee failed to prove that an adverse employment action (e.g., discharge or suspension) was caused by some kind of action by the employee that is
protected by law (e.g., reporting unlawful harassment or filing an EEOC Charge).

Over the years, federal courts have disagreed about the standard of proof for retaliation claims under Title VII. Some courts required plaintiffs to prove that the employer would not have taken the adverse employment action but for the plaintiff's protected activity. Other courts used a standard more easily met by employees, which required proof that the improper motive was just one of the reasons behind the adverse employment action.'

On June 24, the U.S. Supreme Court clarified the type of proof required for a plaintiff to establish a retaliation claim under Title VII in University of Texas Southwestern Medical Center v. Nassar. The Court held that a plaintiff must prove that the unlawful retaliation was the “but-for” cause of the challenged employment action, not simply a “motivating factor” for the employment action. In other words, to succeed on a Title VII retaliation claim, a plaintiff must prove that he would not have suffered an adverse employment action if he had not engaged in the protected activity.

In Nassar, a physician of Middle Eastern descent complained to his employer that a supervisor harassed him based on his religion and ethnic heritage. Ultimately, a university affiliated with the employer denied the physician a permanent position, and he filed a lawsuit claiming that he experienced retaliation for filing a discrimination complaint, and also that he was subjected to race and religion discrimination. A jury found in favor of the physician on these claims, and the U.S. Fifth Circuit Court of Appeals affirmed the judgment on the retaliation claim because the physician had proved that retaliation was a “motivating factor” in the decision to deny the physician a permanent position.'

The Supreme Court reversed the Fifth Circuit's decision, holding that the more burdensome “but-for” standard of causation was the appropriate test for causation in Title VII retaliation cases. The Court reasoned that Title VII's anti-retaliation provision, which prohibits employers from taking adverse employment action “because of” certain criteria, is similar to language found in the section of the Age Discrimination in Employment Act (ADEA) that prohibits age discrimination. Because the Court recently held in Gross v. FBL Financial Services, Inc. that the appropriate standard for proving age discrimination under the ADEA was the “but-for” standard, the Court concluded that Title VII called for the same test of causation.

The Court's decision in Nassar is helpful for employers because it raises an employee's burden for proving causation in retaliation cases, and courts now are more likely to dismiss such claims at the dispositive-motion stage. However, this decision does not necessarily mean that the recent spike in retaliation claims will plateau. Employers should continue to ensure that their Equal Employment Opportunity policies have effective anti-retaliation provisions, that managers receive regular training regarding these policies, and that employee complaints of discrimination are kept confidential.

Potential Defense Against FLSA Collective Actions Recognized

Just like retaliation claims, the number of claims brought under the Fair Labor Standards Act (the Federal law that guarantees non-exempt employees the right to a minimum wage and overtime wages) has increased dramatically in recent years. This increase can be attribtuted primarily to two causes. First, plaintiffs' attorneys have begun aggressively pursuing potential wage claims because the FLSA allows successful plaintiffs to collect their attorneys' fees. Second, the FLSA provides similarly situated employees a right to bring a “collective action” against an employer through a procedure that is simpler and less burdensome than pursuing a “class action” under Federal Rule of Civil Procedure 23. Fortunately, the U.S. Supreme Court recently issued a decision that offers employers a potential defense against collective actions that are initiated by a single plaintiff.

Genesis HealthCare Corporation v. Symczyk was initiated when a registered nurse employed by a Pennsylvania health care center filed a “collective action” lawsuit alleging
that her employer violated the FLSA by automatically deducting 30 minutes per shift for meal breaks, regardless of whether the employee actually took the whole break. Upon answering the complaint, the employer simultaneously served on the plaintiff a settlement offer that included the full amount of unpaid wages as well as attorneys' fees and costs. Notably though, the offer included an express stipulation that it would expire if not accepted within 10 days. When the plaintiff did not accept the offer 10 days later, the employer moved to dismiss the case.

The district court dismissed the suit, concluding that the settlement offer made by the employer fully satisfied the nurse's claim and left her with no remaining interest in the suit. Because no other employee had joined the collective action as a plaintiff, the lawsuit was no longer justifiable. The Third Circuit Court of Appeals reversed the decision because it would “frustrate the goals of [FLSA] collective actions,” although it agreed with the effect of a settlement offer on the nurse's claim.

In a decision issued on April 16, the Supreme Court reversed the Third Circuit and held the suit had been appropriately dismissed. The Court reasoned that the plaintiff's individual action could no longer proceed since the intervening settlement offer effectively “deprive[d] the plaintiff of a 'personal stake in the outcome of the lawsuit.'” The Court then examined whether the lawsuit could remain based on the collective-action allegations in her complaint, and it decided the action must be dismissed since no other employees opted in and “the mere presence of collective-action allegations in the complaint cannot save the suit” after a settlement offer satisfies the individual plaintiff's claim.

Based on the Court's decision in Genesis Healthcare, companies now have a choice when they are served with an FLSA collective-action lawsuit filed by a single plaintiff ' or potentially a small number of plaintiffs. Rather than defend the lawsuit as it would any other, which may increase the chances that the plaintiff will convince his or her coworkers to join the lawsuit as additional plaintiffs, they can pay the plaintiff what he claims he is owed, plus attorneys' fees and other costs allowed by the FLSA, and move to dismiss the case. Whether the latter option is a cost-effective way of resolving an FLSA collective action depends on many factors including the amount claimed by the plaintiff(s), the potential number of employees who may join the lawsuit as plaintiffs in the future, and the risk that a court ultimately will find that the employer violated the FLSA. However, under the right circumstances, it may be a strategy that saves the company substantial time and expense.

Class Waiver in Arbitration Agreement Held Enforceable (Again)

For many years, companies have tried to minimize the high cost and burden of litigation by using arbitration agreements to limit instances when they can be sued in state or federal court.' In light of the recent increase in “class actions,” which typically are even more expensive and burdensome, companies have included in arbitration agreements a waiver of the right to pursue a “class action” through arbitration. The purpose of these waivers is to prevent individuals and other corporate entities from initiating or joining class actions against them in any forum ' either in court or through the arbitration process. Critics of such agreements claim that class waivers are unenforceable because they unfairly deny individuals, including employees, and small businesses an opportunity to join with others similarly situated in a single class action arbitration that is less expensive and easier to maintain than individual arbitration claims.

In June, the U.S. Supreme Court issued its latest decision in cases challenging the enforceability of class waivers in arbitration agreements, and a divided Court once again ruled in favor of a larger company by enforcing an arbitration agreement as written. In American Express Co. v. Italian Colors Restaurant, et al., a group of retail merchants filed a class action lawsuit against American Express claiming that the company used its “monopoly power” in the market for charge cards by forcing merchants to accept credit cards at rates approximately 30% higher than fees for competing credit cards in violation of federal antitrust laws. American Express filed a motion to compel the merchants to pursue their claim through individual arbitrations pursuant to the Federal Arbitration Act (FAA) and the clear terms of the arbitration agreement, which stated, “[t]here shall be no right or authority for any Claims to be arbitrated on a class action basis.” In opposition, the merchants argued that the class waiver was unenforceable, since the cost of the expert analysis needed to prove their antitrust claims far exceeded the amount that any individual merchant could recover.'

In a 5-3 decision, the Supreme Court ruled that the class waiver in American Express's arbitration agreement was enforceable, thus preventing the merchants from pursuing a class action against the company in arbitration or in court. Consistent with other recent decisions interpreting the FAA, the Court held that arbitration is a matter of contract, and courts must “rigorously enforce” arbitration agreements according to their terms. Because the arbitration agreement was a valid contract, and no other statutory or judge-made exception applied, the Court found that it was required to enforce the agreement as written. The Court rejected the theory that the class waiver was unenforceable based on the relatively high cost of pursuing individual claims. According to the Court, a ruling to the contrary would defeat the purpose of arbitration because, before a claim could be arbitrated, courts may be required to determine and compare the cost of developing a party's evidence with the amount of its potential recovery.

Although the American Express case did not involve an issue of employment law specifically, it is highly significant for the increasing number of employers who ask employees to sign arbitration agreements limiting their rights to pursue legal action against the company. Consistent with other decisions involving class waivers, including AT&T Mobility, LLC v. Concepcion and Gilmer v. Interstate/Johnson Lane Corp., which upheld arbitration agreements with similar class waivers, the Supreme Court apparently remains willing to enforce arbitration agreements by which individuals, including employees, waive their rights to pursue claims collectively against companies.'

Employers should not, however, view arbitration agreements with broad waivers as a “silver bullet” for dispensing with employment disputes. Companies should consult experienced counsel when using arbitration agreements because courts will not enforce provisions that violate federal laws (e.g., by violating employees' rights to engage in concerted activity under federal labor laws or by prohibiting employees from filing EEOC charges), or, as recognized in Justice Thomas's concurring opinion in the American Express case, agreements that lack the basic elements of contract formation, such as an absence of consideration or proper consent.

Further, employers should be aware that arbitration can be as expensive and inefficient as some court proceedings, and there is no guarantee that an arbitrator will issue a more favorable opinion than a judge or jury. In fact, parties typically are required to agree on a mutually acceptable arbitrator, and many arbitrators have a tendency to “split the baby” by issuing a decision that affords each side some relief, regardless of the strength of a company's case.

E. Fredrick Preis, Jr., Joseph R. Hugg, and Rachael Jeanfreau are attorneys in the Labor & Employment Section of the Breazeale, Sachse & Wilson law firm, which represents management. Reach them at [email protected], [email protected], and [email protected], respectively.