Supreme Court Holds EEOC Not Bound By Arbitration Agreement

On January 16, 2002, The Supreme Court ruled on the long awaited Waffle House Arbitration case. In the opinion the Court held that an arbitration agreement requiring an employee to submit disability discrimination claims to binding arbitration did not preclude the Equal Employment Opportunity Commission from presenting a discrimination claim in federal court or from seeking all potential forms of relief for the benefit of the employee.

Writing for a 6-3 majority, Justice Stevens asserted the EEOC could not be bound by the terms of an agreement that it did not sign. As a result, not only could the EEOC present a federal court claim challenging the employee’s termination, but it could also seek victim-specific relief such as monetary damages on behalf of the employee. This decision reversed a ruling by the US Court of Appeals for the Fourth Circuit that the EEOC could present the claim but could only seek injunctive, forward-looking relief.

This decision further complicates an employer’s decision to use arbitration agreements.