Penn Plaza v. Pyett

Here is Penn Plaza v. Pyett, which holds that a labor union may waive employees right to sue for violations of statutory rights. Most labor contracts provide that disputes arising under the labor contract are subject to mandatory arbitration.  What the Court held is that an arbitration clause in a labor contract that makes not only disputes arising under the labor contract but also violations of statutory rights subject to mandatory arbitration, then the arbitration clause is enforceable against employees who try to sue in the courts for violations of statutory rights.

Pyett is an aweful decision.  Under traditional labor law, employees have no control over the grievance and arbitartion procedure, which “belongs” to the labor union.  The labor union deciedes whether to file a grievance, whether to process the grievance through the grievance procedure, whether to settle a grievance and on what terms, whether to submit the grievance to arbitration, and what evidence to present at  the arbitration hearing and what legal arguments to make there.  The attorny that represents the labor union owes a duty to the union not the employee.  The labor union does not represent just the individual, but tries to do what is best for the employees as a group.  The employee, as an individual, is only entitled to “fair representation” by the labor union.  Arbitrators are experts in interpreting labor contracts, they do not have any expertise in interpreting federal and state statutes.  Congress explicitly vested the right to interpret these statutes to Executive branch agencies such as the EEOC or the Department of Labor.  State statututes similary vest enforcement to state agencies. 

Pyett will create more tension at the bargaining table between labor unions and employers.  Employers now have a powerful incentive to seek an arbitration clause that waives the right to sue for violations of statutory rights.  Unions will be rightly very reluctant to agree to such waivers.

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