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Arbitration of discrimination claims under building service labor contracts.

Building owners and managers and cleaning contractors with employees governed by the labor contracts between the Realty Advisory Board and either Local 32B-32J, SEIU (residential, commercial or cleaning contractor agreements) or Local 94, IUOE, should be aware that there is a provision in those contracts that requires employees to file a grievance with the union and arbitrate any employment discrimination clams they have against the employer rather than filing such claims in court.

The unions have expressly agreed on behalf of their members that the grievance and arbitration procedures are "the sole and exclusive remedies for violations" of, among other statutes, Title VII, the New York City and the New York State Human Rights laws.

Although not every judge is inclined to agree, attorneys for the industry have had significant success in enforcing these "mandatory arbitration" provisions in court.

It is now well-settled that when an individual employee agrees to submit all employment-related disputes to arbitration, the Federal Arbitration Act mandates that the agreement stands "on the same footing as other contracts" and is enforceable with respect to statutory discrimination claims. (1)

State and federal courts have routinely upheld pre-dispute agreements between employers and individual employees to arbitrate various statutory employment claims.

Similarly, when a union agrees on behalf its members that all employment-related disputes, including statutory discrimination claims, will be submitted to binding arbitration, both federal and state courts have enforced such agreements.

In 1998, the U.S. Supreme Court clarified that a union's waiver of an employee's right to file suit in court must be "clear and unmistakable." (2)

To ensure that that standard was met, the RAB and Local 32B-32J amended the residential agreement during the next round of negotiations to include not just a contractual anti- discrimination clause, but one that prohibits discrimination in violation of expressly identified federal, state, city laws.

The Local 32B-32J commercial and contractor agreements, and the Local 94 contract, were subsequently amended in the same manner.

This new and improved mandatory arbitration provision has been tested in several state court cases and at least one federal court case, and in each, the court compelled discrimination claims to arbitration. On appeal in one of those cases, Garcia v. Bellmarc Property Management, the Appellate Division, First Department in Manhattan unequivocally held that a union's clear and unmistakable waiver of an employee's right to file a statutory discrimination claim in court is enforceable. (3)

Thus, the Garcia decision joined a growing body of precedent in favor of arbitrability. More importantly, it is the governing state law in the First Department, and thus, governs all buildings and service employees located in Manhattan and the Bronx.

In sum, this mandatory arbitration provision, gained through industry-wide negotiations, has had a salutary effect.

It helps all parties involved by providing a means of dispute resolution that is generally faster, more efficient and less costly.

In this way it is better for the employers, better for the employees, and better of the unions that provide this service on behalf of their members.

(1) Gilmer v. Interstate/Johnson Lane Corp., 500 U.S. 20 (1991); see also Circuit City Stores v. Adams, 532 U.S. 105 (2001).

(2) Wright v. Universal Maritime Serv. Corp., 525 U.S. 70, 75 (1998),

(3) Garcia v. Bellmarc Property Management, 295 A.D.2d 233, 745 N.Y.S.2d 13 (1st Dep't 2002).

Paul Salvatore is a partner and John F. Fullerton III is a senior associate at Proskauer Rose LLP.

This article does not, and is not intended to, constitute legal advice. Readers are advised not to take, or refrain from taking, any action based on this article without consulting legal counsel.
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Author:Fullerton, John F., III
Publication:Real Estate Weekly
Geographic Code:1USA
Date:Oct 27, 2004
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