1. The agreement may not limit statutory remedies. The California Supreme Court stated that the arbitration agreement may not limit remedies provided by law such as punitive damages and attorneys fees.

2. The arbitration award must be in writing. The arbitrator in a case must issue a written arbitration decision that will reveal, however briefly, the essential findings and conclusions on which the award is based. A verbal decision is inadequate.

3. The arbitration agreement must provide for adequate discovery. Parties in an arbitration must be entitled to discovery sufficient to adequately arbitrate their statutory claim, including access to essential documents and witnesses. Minimal discovery is inadequate.

4. The agreement must notify the employee that it covers statutory anti-discrimination claims. An employee cannot require an employee to arbitrate a statutory anti-discrimination claim unless an arbitration agreement expressly puts the employee on notice that these claims are included.

5. The agreement must be mutual, not unilateral. The California Supreme Court found that an arbitration agreement that limits the employee to arbitration while allowing the employer the choice of arbitration or civil court, lacks mutuality and is unenforceable. Thus, for example, an arbitration agreement cannot allow an employer to seek injunctive relief in court for trade secret violations and require an employee to arbitrate all claims in all cases.

6. Employees cannot be required to pay unreasonable costs, or any arbitrator’s fees or expenses as a condition of access to the arbitration forum. Thus, employers must foot the entire arbitration bill -- which can become very costly.

John C. Leisek was employed by Brightwood Corporation as a quality assurance inspector. Leisek also was a member of the Oregon National Guard. Leisek owned and operated a hot-air balloon and put the National Guard insignia on his balloon.

Leisek then began to solicit the National Guard for “active duty” orders to fly his balloon to summer events across the west and mideast, for days and a week at a time. Brightwood acquiesced in these “active duty” assignments for a year, but when Leisek submitted a lengthy list of summer events the following year, the Company requested that he not solicit any more events on behalf of the National Guard. The Company also told Leisek that he needed to have signed orders before the Company would provide leave.

Leisek then received written orders for several festivals over the summer months. When written orders were not received for a multi-day event in Colorado, Brightwood warned Leisek that if he did not show up for work, the Company would consider it an abandonment of his job. Leisek flew to Colorado instead of coming to work and he was terminated.

Leisek filed suit under the Uniformed Services Employment and Reemployment Rights Act of 1994 (“USERRA”) claiming that he suffered discrimination for his membership in the National Guard. A violation of USERRA occurs where service or membership in a uniformed service is the motivating factor in an adverse employment action, unless the employer can prove that it would have taken the employment action even had the employee not been a member of the uniformed services.

The trial court agreed with Brightwood that no violation of the USERRA occurred by virtue of Leisek’s termination. The Ninth Circuit Court of Appeals reversed. The Court found that Brightwood was “motivated” by Leisek’s National Guard status because it requested, among other things, that Leisek work instead of solicit active duty orders to fly his balloon to festivals across the country. The Court concluded that a reasonable fact finder “could infer that Leisek’s Guard status was a ‘motivating factor’ in Brightwood’s decision to terminate him.” Leisek v. Brightwood Corp. (January 22, 2002).

The California Supreme Court has agreed to decide if employers are always strictly liable for the conduct of their supervisors even if they prevent and correct harassment by such means as preventative training and corrective policies. The case involves Teresa McGinnis, a Department of Health Services employee, who claimed that her supervisor had sexually harassed her over a long period of time. The employer invoked the federal defense, claiming that it was not liable since it had developed a comprehensive policy and program to thwart sexual harassment and McGinnis failed to avail herself of those measures in a timely manner.

The California Supreme Court’s decision on this closely watched harassment issue should be published later this year.

Baker did not initiate arbitration proceedings, but he did file a charge of discrimination with the EEOC. The EEOC then filed a complaint in federal court alleging that Baker was fired because of his disability. The EEOC sought back pay, reinstatement, compensatory damages, and punitive damages. Can the EEOC file a lawsuit for reinstatement and compensatory and punitive damages on behalf of an individual who himself could not file such a lawsuit due to his arbitration agreement?

The United States Supreme Court decided that the EEOC’s lawsuit could proceed. “It goes without saying that a contract cannot bind a nonparty [the EEOC].” Moreover, the EEOC enforcement role seeks to “vindicate a public interest, not simply to provide make-whole relief for the employee, even when it pursues entirely victim-specific relief. To hold otherwise would undermine the detailed enforcement scheme created by Congress simply to give greater effect to an agreement between private parties that does not even contemplate the EEOC’s statutory function”.

Should employers abandon arbitration agreements? The Waffle House decision should affect a limited number of cases only. The Supreme Court noted that since the EEOC files less than 2% of all anti-discrimination claims in federal court, this decision “will have a negligible effect on the federal policy favoring arbitration.” Equal Employment Opportunity Commission v. Waffle House, Inc. (January 15, 2002).