Wisconsin Court of Appeals Issues Reminder of Power of Federal Arbitration Act

29 July 2016 Wisconsin Appellate Law Blog

In the last generation, the U.S. Supreme Court has repeatedly promoted the policy under federal law in favor of arbitrating claims, including in the area of employment law. Among other issues, the Court has held on multiple occasions that employers can require employees to submit statutory employment claims to arbitration, whether via mandatory arbitration agreements (Gilmer v. Interstate/Johnson Lane Corp., 500 U.S. 20 (1991)) or in collective bargaining agreements (14 Penn Plaza LLC v. Pyett, 556 U.S. 247 (2009)). Likewise, the Court has held that the Federal Arbitration Act (“FAA”) allows contracting parties to agree to submit their disputes to arbitration even when state law requires those disputes to be resolved by an administrative agency (as is the case with employment discrimination claims under Wisconsin law). Preston v. Ferrer, 552 U.S. 346 (2008).

Earlier this week, the Wisconsin Court of Appeals issued another decision bolstering employers’ ability to mandate arbitration of employment claims.

In Menard, Inc. v. Dep’t of Workforce Development, No. 2015AP587 (July 26, 2016), an employee was fired after ten months on the job, when her employer learned that she had a criminal record. Because discrimination on the basis of a prior conviction can be unlawful in Wisconsin under certain circumstances, the employee filed a discrimination claim with the Wisconsin Department of Workforce Development (“DWD”), alleging that her termination violated the Wisconsin Fair Employment Act.

However, when the employee began her employment, she signed an employment agreement that provided in part, “you agree to submit your disputes [defined to include a variety of legal claims under state and federal law] to binding arbitration.” When the DWD refused to stop processing the claim in response to a request from the employer, the employer filed suit in circuit court seeking a writ of prohibition ordering the DWD to halt procedures.

The circuit court granted the writ, and the Wisconsin Court of Appeals affirmed earlier this week. The court held that the FAA preempts the WFEA and that the arbitration agreement unambiguously referred the discrimination claim to arbitration. Given the federal policy in favor of allowing parties to voluntarily submit claims to arbitration, the effect of the employment agreement was to deprive the DWD of jurisdiction to bring the matter to a hearing.

Despite the strong pro-arbitration stance taken by the courts in the last 25 years, relatively few employers mandate that statutory employment discrimination claims be referred to arbitration. This week’s case is another reminder that such agreements can be an effective method of avoiding costly employment litigation with disgruntled workers.

This blog is made available by Foley & Lardner LLP (“Foley” or “the Firm”) for informational purposes only. It is not meant to convey the Firm’s legal position on behalf of any client, nor is it intended to convey specific legal advice. Any opinions expressed in this article do not necessarily reflect the views of Foley & Lardner LLP, its partners, or its clients. Accordingly, do not act upon this information without seeking counsel from a licensed attorney. This blog is not intended to create, and receipt of it does not constitute, an attorney-client relationship. Communicating with Foley through this website by email, blog post, or otherwise, does not create an attorney-client relationship for any legal matter. Therefore, any communication or material you transmit to Foley through this blog, whether by email, blog post or any other manner, will not be treated as confidential or proprietary. The information on this blog is published “AS IS” and is not guaranteed to be complete, accurate, and or up-to-date. Foley makes no representations or warranties of any kind, express or implied, as to the operation or content of the site. Foley expressly disclaims all other guarantees, warranties, conditions and representations of any kind, either express or implied, whether arising under any statute, law, commercial use or otherwise, including implied warranties of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Foley or any of its partners, officers, employees, agents or affiliates be liable, directly or indirectly, under any theory of law (contract, tort, negligence or otherwise), to you or anyone else, for any claims, losses or damages, direct, indirect special, incidental, punitive or consequential, resulting from or occasioned by the creation, use of or reliance on this site (including information and other content) or any third party websites or the information, resources or material accessed through any such websites. In some jurisdictions, the contents of this blog may be considered Attorney Advertising. If applicable, please note that prior results do not guarantee a similar outcome. Photographs are for dramatization purposes only and may include models. Likenesses do not necessarily imply current client, partnership or employee status.

Related Services