9th Circuit Rules Reservist Must Arbitrate Employment Claim

Author: David B. Weisenfeld, XpertHR Legal Editor

October 24, 2016

The 9th Circuit Court of Appeals has ruled that the Uniformed Services Employment and Reemployment Rights Act (USERRA) does not prohibit a mandatory arbitration clause covering all employment discrimination claims. The finding in Ziober v. BLB Resources, Inc., is significant because the San Francisco-based federal appellate court has occasionally struck down mandatory arbitration provisions in other cases.

USERRA contains provisions that:

  • Require employers to reinstate reservists to their jobs after they return from active-duty service; and
  • Prevent retaliation.

The dispute in Ziober involved a Navy reservist's claims that his employer, a California real estate management company, fired him on his last day of work before deployment to Afghanistan. After the reservist returned to the US, he sued his former employer for discrimination under USERRA.

The employer defended that a bilateral arbitration agreement the reservist had signed upon his hiring precluded him from filing the lawsuit. The agreement governed any claim arising out of employment.

The reservist argued that USERRA aims to broadly prohibit employment bias against those who serve in the military, therefore protecting his right to sue in court. However, the 9th Circuit panel found nothing in the statute that prohibited mandatory arbitration agreements. The court also explained that such agreements do not compel employees to give up their substantive rights; the agreements only require enforcement of those rights in an arbitral forum rather than a court.

The federal appellate court also cited more than three decades of Supreme Court rulings recognizing the "liberal federal policy favoring arbitration agreements." For instance, the Court held in its 1991 Gilmer ruling that an age discrimination claim arising under the ADEA could be subject to a mandatory arbitration agreement.