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An April 1 decision of the U.S. Supreme Court signals a dramatic change in the rights of employers to require statutory claims of discrimination to be arbitrated rather than tried before a jury. This time the court’s decision grew out of a collective bargaining agreement between the Service Employees International Union and a multiemployer association, the Realty Advisory Board on Labor Relations. The individual employer was a member of that association, and collectively bargained through it.

The agreement required union members to submit all claims – even claims of employment discrimination – to binding arbitration under the grievance and dispute resolution procedure of the collective bargaining agreement. The language that the parties used was clear. The agreement prohibited discrimination and said “all such claims shall be subject to the grievance and arbitration procedures as the sole and exclusive remedy for violations. Arbitrators shall apply appropriate law in rendering decisions based upon claims of discrimination.”

That language does not leave much room for argument, but the law did. In 1974 the Supreme Court issued a decision in Alexander v. Gardner-Denver Co. that seemed to say that a union cannot waive an employee’s right to a judicial forum under the federal anti-discrimination statutes. The case was widely thought to say that a collective bargaining agreement could not preclude an individual’s right to bring a lawsuit to vindicate a statutory discrimination claim. When individual employees filed lawsuits that reassignments violated federal and state laws prohibiting age discrimination, the employer pointed to the arbitration language.

Justice Thomas, who wrote the opinion for the court, did not see the old case law as an impediment to arbitration. He thought that prior interpretations of Alexander v. Gardner-Denver Co. made a key analytical mistake in suggesting that the waiver of a procedure was the same as a waiver of a substantive right.

The National Labor Relations Act, which governs federal labor-relations law, permits exclusive representatives to bargain collectively on behalf of their members. A union has a broad authority in the negotiation and administration of a collective bargaining agreement. In this case the union and the multiemployer association negotiated in good faith and agreed that discrimination claims would be resolved through arbitration.

Because of the union’s broad authority, the court concluded that the arbitration provision had to be honored unless the antidiscrimination statute itself prohibited claims from being resolved through arbitration. But there is nothing in the federal civil rights law that precludes arbitration as a mechanism for resolving disputes. In fact, the statutes suggest that alternate forms of dispute resolution are appropriate.

In the end, the court firmly supported arbitration as a means of resolving statutory disputes. The opinion concludes that an agreement to submit statutory claims to arbitration is not a waiver of those rights, but merely a selection of how they can be raised. Many of the “old” decisions showed an “old judicial hostility to arbitration” that could no longer be supported. Instead, misconceptions about arbitration have long since been corrected and arbitral tribunals are readily capable of handling the factual and legal complexities of litigation, including discrimination litigation.

The court was not troubled by the fact that a union has control over the arbitration process under a bargaining agreement. Unions must make their decisions subject to a duty of fair representation, which it breaches if its conduct toward an individual member is arbitrary, discriminatory, or in bad faith. In addition, statutory discrimination provisions subject a union to liability if the union discriminates. And, in this case, the bargaining agreement could not have been clearer.

The court also pointed out that if Congress wants to prohibit arbitration of employment disputes, it knows how.

The question is whether a new Congress will step into this issue and amend federal law in response to the Supreme Court’s ruling. But for now, employers with broadly written grievance and arbitration clauses need to be aware of this decision. There is much to recommend arbitration before a trained neutral arbitrator who is familiar with the needs of businesses and the rights of employees, and arbitration is almost always quicker and cheaper than litigation. The case is 14 Penn Plaza v. Pyett, April 1.

Paula Barran, a founding partner at Barran Liebman LLP, has been practicing labor and employment law since 1980. In addition to regularly providing employer advice and solutions, she handles employment litigation in state and federal courts, labor disputes and employment arbitrations.