Case Three: Big Brain Solutions

Big Brain Solutions is a Colossal subsidiary in the consulting industry, located in Silicon Valley.

Early in 2014, Liz Bennett and Ralph Nickleby each applied to become administrative assistants at Big Brain Solutions. After successfully completing the interview process, both were hired and asked to sign contracts that contained the following provision: "If there is any dispute as to employment practices or employee/employer actions, this dispute will be decided via binding arbitration." Both Liz and Ralph signed their contracts after being given ample time to review them and to consult an attorney if they wished to do so.

Several months after he was hired, Ralph became addicted to cocaine. Around the same time, Liz became pregnant with her first child. When Liz experienced complications during her pregnancy, Big Brain initially agreed to grant her medical leave; but shortly thereafter, the company informed Liz that her position had been eliminated due to a "reorganization."

Fearing that Ralph might have trouble picking up the slack for the recently released Liz, Big Brain asked him to take a surprise drug test. Ralph was confused and alarmed and refused to take the test. Big Brain informed him that he was fired because of his refusal to take the test.

Liz decided to file a lawsuit in state court under the state and federal Family and Medical Leave Acts, which guarantee pregnant women a set number of weeks off for pregnancy. Ralph, on the other hand, submitted his case to an arbitrator.

Your task is to determine whether either Liz or Ralph's grievances could be heard by a court, and explain the reasons why or why not. Furthermore, you must determine what the likely outcomes will be if these cases are decided by an arbitrator. Communicate your findings to the vice president via memo.

What general procedures or rules govern a typical arbitration proceeding?

Can a company force an employee to use arbitration (instead of a lawsuit) to settle an employment-related dispute because of a contract provision?

Are there times when an arbitration clause might be invalid or unenforceable against an employee?

What effect do claims based on specific federal or state laws have on arbitration provisions in employment contracts?