119.5 Arbitration decisions and agency rights clauses

On March 3, 2022, the Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act of 2021 was signed into law. The Act amends Title 9 of the United States Code (Federal Arbitration Act) and invalidates “predispute” arbitration agreements that preclude a party from filing a lawsuit in a court of law regarding sexual harassment or sexual assault. The forum (court verses arbitration) is “at the election of the person” alleging such conduct, or the named representative of a class or collective action alleging such conduct. 9 U.S.C. (§§ 401 – 402) (Added Pub. L. 117–90, § 2(a), Mar. 3, 2022, 136 Stat. 26, 27.)

Based on LIRC's decision in Ionetz v. Menard, Inc.(LIRC, 03/13/18), which occurred after Xu v. Epic Sys. Corp. ("XU I") (LIRC, 10/24/17), the equal rights officer issued a preliminary determination dismissing the Complainant's complaint for lack of jurisdiction. LIRC agreed with the dismissal of the complaint for lack of jurisdiction and stated that the dismissal did not affect or undermine LIRC's prior order in XU I for the Respondent to return the severance payment to the Complainant. Xu v. Epic Sys. Corp. ("XU II") (LIRC, 06/04/18).

An employment agreement contained an agreement to submit disputes to binding arbitration, along with an express waiver of the employee's right to have disputes heard by a court, jury, or administrative body, or to participate in a class action. The employment agreement also contained an "agency rights'" clause which provided, in pertinent part: "Nothing in this Manual infringes on your ability to file a claim or charge of discrimination with the Equal Opportunity Commission or comparable state or local agencies." The DWD, unlike the EEOC, is an adjudicative agency and not an investigative agency. ERD's statutory authority is limited to that of an "adjudicative body" charged with deciding particular disputes that are filed with it. Once an individual claim is waived, for example by an arbitration agreement, there is no additional investigative, enforcement or other function for ERD to perform. Insofar as XU I suggested the Division had authority to proceed with a Complainant's complaint notwithstanding the waiver he had signed, the XU I decision was overruled. Ionetz v. Menard, Inc. (LIRC, 03/13/18).

Severance agreement's "agency rights" clause provided: "Nothing in this release is a waiver of a right to file a charge or complaint with administrative agencies such as the federal EEOC, and I cannot be prohibited from or punished for filing as a matter of law, but I waive any right to recover damages or obtain individual relief that might otherwise result from the filing of such a charge with regard to any released claim." LIRC determined that the language in the severance agreement was intended to preserve the Complainant's right to file a complaint with the ERD. LIRC remanded the case for investigation into the merits of the complaint and further proceedings that may be warranted. In addition, LIRC noted that if discrimination was found, the Complainant's remedies would not include back pay, reinstatement, or any other type of individual relief that might ordinarily be awarded as a result of a finding of such discrimination, due to the waiver of the right to relief. Finally, LIRC ordered the Respondent to return the severance payment to the Complainant because the severance agreement remained in effect, pending a decision by the ALJ with respect to whether the agreement was entered into knowingly and voluntarily. Xu v. Epic Sys. Corp. ("XU I") (LIRC, 10/24/17). Overruled, Ionetz v. Menard, Inc. (LIRC, 03/13/18).

Employment agreement’s “agency rights” clause, provided that “Nothing in this Agreement infringes on your ability to file a claim or charge of discrimination with the U.S. Equal Opportunity Commission or comparable state or local agencies. These agencies have the authority to carry out their statutory duties by investigating the charge, issuing a determination, filing a lawsuit in Federal or state court in your own name, or taking any other action authorized under these statutes. You understand that you have the right to participate in such action.” The court decided that this language did not preclude DWD's adjudication of the employee’s WFEA claim from the agreement’s arbitration clause, which provided that “any and all claims shall be resolved by binding arbitration. . . pursuant to the National Rules of the Resolution of Employment Disputes of the American Arbitration Association. This provision shall supersede any contrary rule or provision of the forum state. This provision constitutes an express waiver of the right to court, jury or administrative review or to participate in class action.” The agency-rights clause merely preserves the DWD’s statutory rights. However, any adjudication of an employee's claims by the DWD would not be binding on the parties because resolution is subject to binding arbitration. Menard v. Dep't of Workforce Dev. & Fenhouse, No. 2015AP87 (Wis. Ct. App. July 26, 2016) (unpublished).

The Labor and Industry Review Commission declined to adopt an Administrative Law Judge’s holding that an interest arbitrator’s decision had a preclusive effect on an action under the Wisconsin Fair Employment Act. The Commission reviewed the underlying merits of the Complainant’s case. Milwaukee Teachers Educ. Ass’n v. Milwaukee Bd. of Sch. Dir. (LIRC, 06/30/10).

If the “Acknowledgment of Conditions of Employment” document signed by the Complainant when he began work for the Respondent had stated that arbitration was the final, binding, and exclusive means for resolving all state claims, it would be arguable that the Complainant’s subsequent complaint to the Equal Rights Division should be dismissed, consistent with Supreme Court decisions upholding the enforceability of provisions in employment contracts specifying binding arbitration as the exclusive and final remedy for claims under state law, including discrimination claims. However, in this case, the agreement signed by the Complainant made a distinction between claims filed in court (for which arbitration was the exclusive and final remedy) and those, as here, filed in an administrative forum, for which there is no provision for binding arbitration. As a result, the Complainant never agreed that binding arbitration would be the exclusive and final remedy of the claims at issue. Carrington v. Gen. Elec. (LIRC, 04/30/10).

The Respondent’s request that the proceedings before the Equal Rights Division be held in abeyance pending the outcome of the Respondent’s arbitration process was denied. Although an arbitrator’s decision may have some persuasive value under certain circumstances, it would not preclude the Equal Rights Division from examining de novo the issue of whether an employee has been discriminated against within the meaning of the Wisconsin Fair Employment Act. Since the completion of the Respondent’s arbitration process would not relieve the Equal Rights Division of its responsibility to resolve this case, further delay was not merited. Carrington v. Gen. Elec. (LIRC, 04/30/10).

An arbitrator’s decision should not preclude the Equal Rights Division from examining de novo the issue of whether or not an employee was the victim of discrimination. It is, however, appropriate to admit the arbitration decision as evidence and to accord it such weight as may be appropriate under the facts and circumstances of each case. Betters v. Kimberly Area Sch. (LIRC, 11/28/07).

There is reason to be hesitant about giving issue preclusion effect to a grievance arbitration award in a subsequent litigation of an employment discrimination claim. The best approach is to accord the arbitration award such weight as may be appropriate under the facts and circumstances of each case. Betters v. Kimberly Area Sch. (LIRC, 07/30/04).

The issue of whether or not a Respondent violated the Wisconsin Fair Employment Act when it placed the Complainant on disability leave was not foreclosed by an adverse arbitration decision which found that the Respondent did not violate the collective bargaining agreement when it placed the Complainant on disability leave. Lee v. Dane County Highway Dept. (LIRC, 07/24/98).

An arbitration decision may be admitted in an Equal Rights hearing and given such weight as is appropriate under all the facts and circumstances of the case. It was appropriate to give an arbitration decision some weight where the following circumstances existed: the parties appeared at the arbitration hearing with counsel; the arbitration hearing focused very specifically on the factual issue of whether the Complainant had called in (which was an issue in the Equal Rights hearing); the Complainant and other witnesses who had testified in the Equal Rights hearing testified in the arbitration hearing; transcription of the arbitration hearing and briefing presumably allowed detailed arguments to be submitted to the arbitrator; and the arbitrator’s lengthy and reasoned decision reflected careful consideration of all of the evidence. Moncrief v. Gardner Baking (LIRC, 07/01/92).

The doctrine of collateral estoppel prevents both parties from re-litigating relevant factual disputes already decided at an arbitration hearing. In this case, the doctrine of collateral estoppel prevented the re-litigation of facts surrounding the Complainant's permanent light duty classification. Seeman v. Universal Foods (LIRC, 03/30/92).

When an arbitration hearing addressed facts regarding the Complainant’s permanent partial disability, his medical restrictions, his job duties and functions and comparisons of the employee’s ability vis-a-vis others’ abilities, and where the case was litigated by both parties, the decision of the arbitrator collaterally estops the Complainant from re-litigating the dispute surrounding the medical evidence. Seeman v. Universal Foods (LIRC, 03/30/92).

A Complainant is not collaterally estopped from introducing evidence that her termination was not for just cause because she received an adverse arbitration decision. Dohve v. DOT (Wis. Pers. Comm’n, 11/03/88).

An adverse arbitration decision does not preclude a Complainant from pursuing a discrimination complaint where the discriminatory aspects of the complaint were not addressed at the arbitration. Massenberg v. UW-Madison (Wis. Pers. Comm’n, 07/21/83).

An arbitration decision may be admitted at a hearing and given appropriate weight. Krueger v. DOT (LIRC, 10/04/82).

LIRC was not deprived of jurisdiction by the outcome of an arbitration instituted under a union contract since the Wisconsin Fair Employment Act provides a distinct procedure for determining questions of employment discrimination. Winnebago County v. LIRC (Brehm and Boutin) (Dane Co. Cir. Ct., 09/18/78); also, Nielson Iron Works v. LIRC (Oliver) (Racine Co. Cir. Ct., 03/22/82); Jones v. DNR (Wis. Pers. Comm’n, 11/08/79).