Arbitrating Discrimination Claims in Minnesota: A Bump in the Road
By: RICHARD A. ROSS
June 2000
The Minnesota Supreme Court recently ruled in Correll, D.D.S., v. Distinctive Dental Services, P.A. that the "exclusivity" provision of the Minnesota Human Rights Act (MHRA) precludes arbitration of a pending claim despite a written agreement between the parties requiring arbitration. The Supreme Court thus overruled the decision of the Minnesota Court of Appeals in the same case, which we discussed in the August 1999 issue of the Employment & Labor Law Focus.
In brief summary, Bryan Correll, a dentist, signed an employment agreement with his employer, Distinctive Dental Services, P.A. (DDS), that required any controversy or claim arising out of his employment to be settled by arbitration before the American Arbitration Association (AAA). The agreement also provided that during his employment with DDS, Correll would not compete within seven miles of its offices.
After signing the employment agreement, Correll's wife, also a dentist, joined a competing practice within seven miles of DDS's offices. DDS terminated Correll's employment, claiming a breach of his non-compete. Correll filed a marital status discrimination charge with the Minnesota Department of Human Rights (MDHR) against DDS. After a hearing was ordered before an Administrative Law Judge, DDS filed a demand for arbitration before the AAA. Correll then went into District Court and successfully brought a motion to stay arbitration, which, as noted above, the Supreme Court upheld.
In making its decision, the Supreme Court noted that the MHRA permits arbitration of claims in two situations. The first is if arbitration is begun before filing a charge or bringing a lawsuit under the statute. In this instance, the one-year limitation period for filing a charge or bringing a lawsuit does not run while the claim is being arbitrated. The employer must inform the MDHR that the claim is being arbitrated, when the arbitration commenced, and when it ended.
The second situation in which arbitration of MHRA claims is permitted is if the Commissioner of the MDHR sanctions the arbitration before the issuance of a probable cause determination. Here again, the one-year limitation period is suspended while the arbitration is proceeding.
The result of the Correll holding is that a provision in an employment agreement in which an employer and employee agree to arbitrate a MHRA claim may not be enforceable. However, the Court did provide one potential avenue by which employers may be able to require arbitration of MHRA claims pursuant to an employment agreement.
The Court noted that the employer in Correll had not claimed that its employment agreement was governed by the Federal Arbitration Act (FAA) or involved interstate commerce, a threshold requirement for application of the FAA. The inference is that the FAA may apply if an employer provides evidence that its agreement involves interstate commerce. The Court had held in another case that, if the FAA applies to an employment agreement containing an arbitration provision, it preempts the MHRA and an employee's MHRA claims will be subject to arbitration pursuant to the terms of the agreement. See Johnson v. Piper Jaffray, Inc., 530 N.W.2d 790 (Minn. 1995).
We suggest that you consult with your employment counsel regarding whether employment agreements that contain compulsory arbitration provisions need to be modified or updated in accordance with the Court's Correll decision.