Cornell Law Roundtable Focuses on Changes in Arbitration and Discrimination

May 19, 2010

Contact:  Jennifer Macera, 607.255.3101, js372@cornell.edu 

FOR IMMEDIATE RELEASE:
Cornell Law Roundtable Focuses on Changes in Arbitration and Discrimination

U.S. based employers face shifting playing field due to possible legislation 

Ithaca, NY, May 19, 2010 – Participants in this year's Labor and Employment Law Roundtable debated the possible tradeoffs between arbitration and at-will employment. They also analyzed possible changes in discrimination law. The roundtable, produced by the Cornell Center for Hospitality Research, and sponsored by Cornell Law School and Cornell ILR School, was chaired by Associate Professor David Sherwyn, of the Cornell School of Hotel Administration.

The arbitration discussion started when Dave Sherwyn noted that Stokes, Roberts & Wagner has a number of clients who essentially trade at-will employment for an agreement to arbitrate employment issues. Under these contracts employees will only be fired for cause, if they agree to arbitration instead of court action. 

However, two other roundtable participants, Gregg Gilman, of Davis and Gilbert LLP, and David Rothfeld, of Kane Kessler, argued that employment-at-will is an important standard that employers should maintain. Gilman and Rothfeld also thought that arbitrators seeing such a contract might apply union cause standards, which are difficult to overcome. John Gessner, general counsel for Texas Wings, questioned whether he should exclude class actions from his arbitration policies. All participants agreed that arbitrators and class actions do not mix well.

In June 2009, the U.S. Supreme Court caused a minor earthquake in discrimination law, as it applies to age discrimination. In this case, Gross v. FBL Financial Services, the Court held that Jack Gross, 54, had to prove not just that age was a motivating factor in his demotion, but that the decision was "because of age." The difference between "because of" and "motivating factor" is important in jury instructions, reported Sherwyn and Cornell Law School Professor Michael Heise. Although employers' liability is not increased by the "motivating factor" instruction, Sherwyn and Heise explained, it does mean that juries unwittingly are awarding the attorney fees to the plaintiffs, which were paid by employers, regardless of the case's outcome. Often the fees are greater than any potential back pay owed the employee.

Gilman pointed to the Gross case as one source of potential new employment legislation, which would overturn the Gross ruling. Another issue was mandatory arbitration, which some legislators propose to outlaw. Department of Labor rulings regarding overtime are also of great concern to hospitality employers.

About Center for Hospitality Research Roundtables:
Center roundtables are a meeting place for invited senior-level hospitality industry executives and Cornell faculty members. Each roundtable lasts one day and is divided into four or five sessions. Sessions begin with a short research presentation (by a Cornell faculty member, faculty from another institution, or an industry leader) that lasts five to ten minutes. Immediately following, one or two industry discussants either support or contest the researcher's hypothesis or conclusion. The conversation is then opened up to the entire roundtable for discussion. For more information on roundtables, please visit: http://www.hotelschool.cornell.edu/research/chr/events/roundtables/.

About The Center for Hospitality Research
A unit of the Cornell School of Hotel Administration, The Center for Hospitality Research (CHR) sponsors research designed to improve practices in the hospitality industry. Under the lead of the CHR's 81 corporate affiliates, experienced scholars work closely with business executives to discover new insights into strategic, managerial and operating practices. The center also publishes the award-winning hospitality journal, the Cornell Hospitality Quarterly. To learn more about the center and its projects, visit www.chr.cornell.edu.
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