Employers without a union sometimes think it’s a good idea to consider implementing a policy that requires employees to arbitrate workplace claims rather than permit them to pursue remedies in court. The selling point, the story goes, is that it’s cheaper, faster and you don’t have to worry about a jury deciding the fate of the parties.
Anyone who has gone through the arbitration process knows that along with the positives of arbitration – and there are some – comes the potential for negative consequences that are no different from negative outcomes in court. What’s the big difference? A party can appeal a judge’s wacky decision and have a chance at getting it reversed. The scope of judicial review of an arbitrator’s award is so narrow that it is nearly impossible to get an adverse decision overturned.
A recent case in point, as they say, comes from right here in Baltimore. Hooters, no stranger to controversy over the years, requires arbitration for the resolution of employment disputes. For those of you who have neither been to nor heard about Hooters, it’s a restaurant that employs only female servers. They wear tight, low cut white tee-shirts and short orange shorts. Years ago Hooters overcame/resolved lawsuits alleging sex discrimination in its hiring of only female servers by explaining that the chain is not really selling just burgers and wings, it is selling an “entertainment experience.”
The heart of that “experience” for patrons is being served by a “Hooters Girl” the definition of which, according to the Hooters’ Handbook, is: “the look of the ‘All American Cheerleader, Surfer, Girl Next Door.’” A Hooters Girl is told she is “literally playing a role” and, as such, must “comply with the Image and Grooming Standards that the role requires.” These standards include a requirement that “no bizarre haircuts, styles, or colors are acceptable.”
The role as a Hooters Girl in Baltimore hit a snag for a young woman named Farryn Johnson. Ms. Johnson is African-American. She came to work with blonde highlights in her hair. She claimed that a manager told her that the highlights were not acceptable because “black people don’t have blonde hair.” She was disciplined and then fired in August 2013 for failure to comply with the Image Policy. Ms. Johnson challenged the firing as race discrimination, claiming that Hooters Girls of other races were not disciplined for having hair colors that were not natural. Hooters, on the other hand, described Ms. Johnson’s highlights as a “skunk streak,” conjuring an image somewhat different from “highlights.”
The matter proceeded to arbitration, as Hooters required. Last week (1-1/2 years after she was fired), the arbitrator – one Edmund D. Cooke, Jr. – held that Hooters violated federal and state anti-discrimination laws in disciplining and firing Johnson and awarded $250,000. It should be noted that, unlike court decisions, arbitration opinions and awards need not be made public, and I could not review the arbitrator’s written decision here.
In response to press reports of the award, Hooters issued its own press release lambasting not just the decision, but the arbitrator as well. Hooters also stressed that Ms. Johnson was awarded less than $12,000, with her lawyers getting the rest of the money. See http://news.hooters.com/landing-page/hooters-responds-discrimination-arbitration.
For our purposes, here’s the most interesting excerpt from the Hooters’s press release: “[f]rom the beginning of his affiliation with this matter, the Arbitrator demonstrated an unfortunate bias and a complete disinterest in hearing Hooters’ version of the facts. Despite allowing Ms. Johnson’s attorneys to introduce various kinds of evidence, the Arbitrator refused to allow Hooters to present the truth through testimony, which would have established beyond doubt the groundlessness of Ms. Johnson’s claims.”
Hooters went on to say that “[w]e value and respect all of our Hooters Girls and celebrate their diversity, as evidenced by our annual swimsuit calendar models, our Miss Hooters International contestants, Hooters Girl of the Year nominees and the nearly 18,000 Hooters Girls working in our restaurants across the globe today. All of us at Hooters are extremely disappointed by today’s unjustified ruling. That said, our disappointment won’t keep us from doing what we love the most—putting smiles on people’s faces every day in every Hooters restaurant. Our guests deserve nothing less.” So, there you go.
Let’s sum up the takeaways here:
First, Hooters – who requires the arbitration of claims – is complaining about an adverse decision. Any employment attorney who arbitrates cases will tell you that sometimes you win a case you thought you would lose; sometimes you lose a case you thought you would win. Sometimes you get an arbitrator you think did not have a clue about your side of the case. The solution? Don’t require arbitration. Permit use of the judicial process instead, where you can appeal what you think was a raw deal. If you don’t want to do that, you have got to expect that sometimes you will get a decision you dislike, and no opportunity for review. Suck it up.
Second, if the Hooters’s press release is correct, the award only gave Ms. Johnson a pittance in back-pay. Under anti-discrimination laws, she could have obtained punitive and compensatory damages that could have reached into the mid-six figures. How her attorneys reached over $200,000 in legal fees to arbitrate a single employee discharge is another matter, and one that probably deserves some consideration in the sense of what might be referred to as “reasonable attorneys’ fees,” particularly when arbitration is supposed to be cheaper and quicker. But, if the arbitrator really awarded Ms. Johnson so little, it does not suggest he found the underlying facts showed outrageous discrimination.
Finally, and I say this not just as an attorney who represents clients in arbitration, but as an arbitrator, virtually all arbitrators do their best to follow the law and provide “industrial justice” to the parties before them. Employers should not think that the arbitration of employment disputes is a panacea that makes sense in all circumstances. The arbitration yellow brick road has potholes. Occasionally some of them are pretty deep.