The U.S. Supreme Court recently decided a case dealing with the enforceability of an arbitration provision in an employment contract. In Rent-A-Center v. Jackson, the employee filed a lawsuit against his employer claiming employment discrimination. The employer asked that the case be removed from the court and the claim decided by an arbitrator. Before the employee started his job, the employer required him to sign an agreement that he would arbitrate any employment claim, including discrimination claims. This agreement also gave the arbitrator the sole right to decide whether the arbitration provisions were enforceable. Usually, the enforceability of the agreement is decided by a judge. The employee claimed that a judge should decide whether the arbitration contract was enforceable, not an arbitrator.
The case found its way to the U.S. Supreme Court. In a 5-4 decision, the majority ruled that the employee in this case would be required to have the arbitrator determine whether the arbitration contract was enforceable. The majority decided that the employee did not follow the correct procedure in challenging the arbitrator's right to determine enforceability. The employee challenged the entire arbitration contract as being totally unfair (unconscionable). The Supreme Court ruled that this was too broad a request to be determined by the federal judge. If the employee had only challenged the provision granting the arbitrator the right to determine the enforceability of the agreement, this issue could have been decided by a court.
The bottom line is that an employee must specifically ask the court to review the provision giving the arbitrator the right to resolve issues involving the enforceability of the agreement. Otherwise, the court will not resolve broader questions regarding the enforceability of the contract as a whole. It is a fine point of law.
This opinion is important because it shows to what length the U.S. Supreme Court will go to enforce arbitration provisions and force parties to submit to arbitration. The decision is another step in the erosion of our right to have a dispute resolved by a judge or jury.