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Agreements To Arbitrate Statutory Discrimination Claims Must Be Clear And Unmistakable To Be Enforced In Massachusetts

The Supreme Judicial Court of Massachusetts has decided that an employer cannot compel arbitration of an employee’s statutory discrimination claims unless the agreement to arbitrate is “clear and unmistakable.”  The ruling sends a strong message to employers to carefully review the language of any contract that purports to waive or limit an employee’s right to pursue statutory discrimination claims.

The plaintiff in that case, Warfield v. Beth Israel Deaconess Medical Center, Inc., was an anesthesiologist on the medical staff of Beth Israel Deaconess Medical Center, Inc. (“BIDMC”).  In 2000, the plaintiff entered into an employment agreement with BIDMC and her employer, Harvard Medical Faculty Physicians (“HMFP”), when she became chief of the anesthesiology department.  A clause in her agreement provided that “any claim, controversy or dispute arising out of or in connection with [the agreement] or its negotiations shall be settled by arbitration.”

The plaintiff alleged that during the years following her appointment to chief of anesthesiology, the chief of surgery at BIDMC subjected her to a pattern of gender discrimination.  The plaintiff also claimed that she complained about this to the president and chief executive officer of BIDMC (the “CEO”) but that no or insufficient action was taken.  When in 2007 BIDMC terminated the plaintiff’s appointment as chief of anesthesiology, she contended that the decision was discriminatory, retaliatory, and defaming.

Following the requisite filing with the Massachusetts Commission Against Discrimination (the “MCAD”), the plaintiff pursued multiple claims against BIDMC, HMFP, the chief of surgery, and the CEO in the Massachusetts Superior Court.  [Note:  The MCAD is not bound by an arbitration agreement to which it is not a party, and thus the MCAD has discretion to pursue an employee’s discrimination claim despite an agreement by the employee to submit such claims to arbitration.]

The Superior Court complaint contained the following counts: gender discrimination and retaliation under the Massachusetts anti-discrimination statute, Chapter 151B of the Massachusetts General Laws, against all the defendants; tortious interference with advantageous or contractual relations against BIDMC and the individual defendants; and defamation against BIDMC and the individual defendants.  The defendants moved to dismiss the complaint and compel arbitration on the ground that the plaintiff’s employment agreement mandated arbitration of all her claims.  The Superior Court denied the motions.

On appeal, the Supreme Judicial Court held that the plaintiff’s statutory discrimination claims did not fall within the scope of the arbitration clause contained in the employment agreement, and that the plaintiff could proceed with her discrimination action in Superior Court.  The Supreme Judicial Court reasoned that in light of the strong public policy against workplace discrimination, “an employment contract containing an agreement by the employee to limit or waive any of the rights or remedies conferred by c. 151B is enforceable only if such an agreement is stated in clear and unmistakable terms.”  While the Court acknowledged that parties to an employment contract may agree to arbitrate statutory discrimination claims, it now requires that the parties “state clearly and specifically that such claims are covered by the contract’s arbitration clause.”  This ruling qualifies the longstanding presumption that a dispute is covered by an arbitration clause that is broad in reach.

The Court also ruled that the plaintiff could proceed in Superior Court with her common-law claims of tortious interference and defamation, even though the “clear and unmistakable” requirement set forth in its ruling appears to generally apply only to statutory discrimination claims.  Relying on the principle of judicial economy, the Court concluded that it would be more efficient to proceed in one forum because the common-law claims arose from the same set of facts as the statutory claims and were “intertwined” with them.

As illustrated above, if an employer wishes to submit all potential employment disputes to arbitration, then the employer should carefully draft an arbitration clause that expressly includes all relevant discrimination statutes.  This is so regardless of whether the arbitration clause is contained in an employment agreement, an employee handbook, a separation agreement, or in any other employment document.

The Firm’s attorneys are experienced in negotiating, drafting, reviewing, and enforcing contractual arbitration provisions.  We would be happy to answer any questions that you may have about the Warfield case or employment arbitration in general.