Massachusetts Supreme Judicial Court Rules Arbitration Provision Does Not Stop MCAD

In Joule, Inc. v. Simmons, our highest court, the Massachusetts Supreme Judicial Court (“SJC”), declared that a provision in a contract for employment requiring arbitration of discrimination claims does not prevent the Massachusetts Commission Against Discrimination (“MCAD”) from separately launching its own investigation into the claim. In light of this ruling, employers now can be forced to defend their actions at both arbitration and the MCAD, even when under the contract they have agreed with their employees to use arbitration as a means of resolving discrimination complaints.

By way of background, former employee, Randi Simmons, filed a pregnancy discrimination complaint at the MCAD after her employer, Joule, Inc., fired her. Because Simmons had signed an employment contract containing an arbitration provision in it for discrimination claims, Joule, Inc. filed its own suit in state court seeking to prevent Simmons from pursuing her MCAD complaint. When the MCAD learned about Joule, Inc.’s lawsuit, it sought and obtained an order from the court allowing Simmons’ discrimination complaint to continue at the MCAD. Joule, Inc. appealed that decision to the SJC.

The SJC held that the MCAD’s investigation could proceed regardless of the arbitration provision, allowing both the arbitration and MCAD proceedings to “continue concurrently, on parallel tracks.” In reaching this decision, the SJC noted the MCAD was not a party to the agreement and, given that its primary function and purpose is to enforce anti-discrimination laws and prohibit employers from discriminating against any of its employees, it is in the public’s interest for the MCAD to proceed with its own independent investigation into alleged workplace discrimination, ordering relief where appropriate. Because Simmons and Joule, Inc. had agreed to arbitrate, the SJC noted that Simmons may be precluded from pursuing the matter individually as a Complainant.

What does this ruling mean for businesses? Well, one thing is for sure: this decision will likely drive up the costs of defense as businesses now may need to defend themselves in two forums. Secondly, the decision also gives the MCAD clearer authority to pursue actions in the name of the Commonwealth, rather than having the individual Complainant affected by the discriminatory action take the lead. Under this analysis and with this authority, cases now may still proceed at the MCAD even when the Complainant involved no longer wishes to pursue it or, like in the instant case, when the Complainant is prohibited by contract from pursuing it.