Hunton Employment & Labor Perspectives

The Ninth Circuit has joined both the Sixth and Fifth circuits in holding that USERRA claims are subject to arbitration pursuant to an employee’s agreement to arbitrate employment related claims.  See Ziober v. BLB Resources, Inc., 2016 WL 5956733 (9^th Cir. Oct. 14, 2016).  In doing so, the Ninth Circuit, a traditionally pro-employee circuit, has assuaged any fear of uncertainty that employers may have had with respect to their rights to compel arbitration of USERRA claims.

USERRA is a federal statute that prohibits employers from discriminating and retaliating against employees on the basis of their membership or application for membership in the uniformed services, or their performance or obligations of such service. Additionally, USERRA also grants employees the right to be reemployed in their civilian job under certain circumstances if they leave that job to perform uniformed service.

In this case, Ziober, who served in the United States Navy Reserve, was recalled to active duty in Afghanistan.  On Ziober’s last day of work, he was informed that he would not have a job upon his return from active duty.  Ziober sued his employer claiming discrimination and denial of reemployment rights under USERRA.  However, Ziober had signed an agreement with his employer requiring the arbitration of legal disputes and accordingly, the employer moved to compel arbitration.  The district court granted the motion and Ziober appealed.

USERRA’s section 4302(b) states that it "supersedes any state law . . . contract, agreement, policy, plan, practice or other matter that reduces, limits or eliminates . . . any right or benefit provided by [USERRA], including the establishment of additional prerequisites to the exercise of any such right or the receipt of any such benefit."  USERRA also grants an individual the right to either file a complaint with the Secretary of Labor or to directly pursue an action in federal court.

Ziober argued that these provisions when read together “create a procedural right to sue in federal court that precludes a contractual agreement to arbitrate.”  The Ninth Circuit disagreed by first stating that an employee does not give up his or her substantive rights when he agrees to arbitrate.  The court then reasoned that these provisions describe civil liability in a “standard fashion”  and do not, as Ziober argued, establish “contrary congressional command” to override the Federal Arbitration Act.  The Court echoed the Supreme Court’s logic in CompuCredit Corp. v. Greenwood that if the “mere formulation of a cause of action were sufficient” to preclude arbitration, then “valid arbitration agreements covering federal causes of action would be rare indeed.”  The Ninth Circuit further noted that nothing in the plain language of USERRA mentions mandatory arbitration or the FAA nor contains any “unmistakable” language precluding arbitration.

One other important takeaway from this opinion was the Ninth Circuit’s discussion of the prohibition of “the establishment of additional prerequisites” in section 4302(b).  The Court stated that this provision “directly relates to union contacts and collective bargaining agreements that would require an employee to take an additional step or to exhaust certain remedies before filing suit.”  The Court further explained that an individual arbitration agreement, like the one in this case, allows the employee to immediately vindicate his or her substantive rights in an arbitral forum, with no additional steps or exhaustion of other remedies required.  It is important to note that an arbitration agreement that would require an employee to first exhaust some type of additional step, such as mediation, may be found to violate section 4302(b).  Thus, employers are cautioned from adding anything to their arbitration agreement that would prevent the employee’s immediate request for arbitration.