Experts in employment law sympathetic to management and workers shrugged off the Supreme Court’s decision last week that made exhaustion of remedies a procedural rather than jurisdictional requirement for job discrimination claims brought under federal law.
But what employment law experts consider normal, would likely raise questions for non-experts who understood arcane employment law concepts. Exhaustion of administrative remedies is one of those arcane concepts and it is an idea that illustrates the over-privileged, in my view, position employers hold in the American legal system in relation to their employees.
Here is an example of the benefit employers get from the requirement to exhaust administrative remedies.
Let’s say you lose your job, so you lose affordable health insurance. Let’s say you need some emergency medical treatment and get stuck with a $10,000 bill you can’t pay.
Your local health care monopoly doesn’t need to get permission to sue you to collect their medical bill. They can just sue you.
But let’s say, you want to sue your former employer firing you because of your age, sex, religion, etc. Under federal law and many state laws you need to first file a charge with a civil rights agency and get their permission to sue your employer. (Nebraska actually doesn’t have those requirements. There are some exceptions under federal law as well.) In legal parlance, this is called exhaustion of administrative remedies.
If you sue your employer without exhausting administrative remedies, your employer can have your case dismissed even if you would win your case on the merits. The recent Supreme Court case just holds that employers must bring that up in the beginning of the lawsuit otherwise they lose that defense.
But if the local hospital sues you for an emergency room bill you can’t pay your bill, you can’t argue that they failed to exhaust administrative remedies because they didn’t get permission from a third party to sue you.
Does anyone else get this sweetheart deal in litigation? Yes, the state, local and federal government. This is called sovereign immunity. Sovereign immunity is a doctrine from English common law that holds the king can do no wrong.
But wait, didn’t Americans fight a war in the 18th century to get rid of monarchs? Isnt the concept of sovereign immunity literally anti-American? One early Supreme Court decision would agree. But soon afterward American officials decided it was good to be king and enshrined this foreign concept into American law.
I think of exhaustion of remedies as a kind of private sovereign immunity for employers. In comparison to the rest of the world, American employers are Louis XIV-style absolute monarchs. The international Organization for Economic Cooperation and Development, OECD, has an index comparing the ease of firing employees in developed countries. Per the OECD, the United States has the least amount of legal protections for employees in the world and is the easiest country in the world for employers to fire employees. A requirement to ask for permission to pursue a wrongful termination case is just another way to protect employers.
I concede that civil rights agencies can be useful and serve a greater purpose than just deciding discrimination cases. But civil rights agencies can lose effectiveness if they are underfunded. In general, administrative agencies are also vulnerable to influence by the industries they regulate — so-called regulatory capture. The option for individuals and groups to litigate directly and effectively against their employers is a necessity for workplace rights. Requiring employees to exhaust administrative remedies makes it harder for them to do so.