Compulsory Arbitration Agreements in Employment Contracts from Gardner-Denver to Austin: The Legal Uncertainty and Why Employers Should Choose Not to Use Preemployment Arbitration Agreements

In Gilmer v. Interstate/Johnson Lane Corp. the Supreme Court enforced a mandatory arbitration clause in a securities registration application and barred the employee from seeking relief in federal court for his Age Discrimination in Employment Act ( ADEA ) claim.\u27 Since the Court\u27s decision compelling arbitration of an employee\u27s statutory claim, labor and employment lawyers have encouraged employers to include binding arbitration clauses covering all potential employer-employee claims in employment applications, handbooks, and collective bargaining agreements ( CBAs ). As one commentator wrote after the Gilmer decision, [t]he only thing remaining is for employers to begin writing compulsory arbitration clauses into their employment contracts. By inserting these clauses, many lawyers fail or refuse to recognize that the Supreme Court distinguished Gilmer from its earlier decision in Alexander v. Gardner-Denver Co. In Gardner-Denver, the Court allowed an employee to litigate his claim that the employer violated Title VII of the Civil Rights Act of 1964 ( Title VII ) in federal court even though the union\u27s CBA contained a mandatory arbitration provision. The Gilmer Court distinguished Gardner-Denver on three issues, but lower courts appear to adhere only to the distinction based on the context of the agreement. Courts since Gilmer have tended to enforce arbitration clauses in individual employment contracts but not provisions contained in CBAs. The Fourth Circuit in Austin v. Owens-Brockway Glass Container, Inc., however, eliminated this difference just five years after Gilmer. It held that voluntary arbitration agreements are enforceable whether included in an employment contract or a CBA. The Austin decision, though, has not been widely adopted.\u2