The Washington Supreme Court ruled in a 5-4 decision that employers must pay for the union's attorney fees when an arbitrator awards union members back pay. Fire Fighters Local 46 v. City of Everett, __ Wn.2d __, __ P.3d __ No. 98-2-02814-7 (March 28, 2002). In upholding the trial court and a Washington Court of Appeals decision, the state's highest court said that the Washington Wage Claim Statute requires the award of attorney fees to the union's attorney after the arbitrator overturned the City of Everett's one-day suspension of two employees. The Washington courts had ruled earlier that the union could not recover attorney fees if the collective bargaining agreement clearly provided that each party was responsible for its own attorney fees. After distinguishing the collective bargaining agreement in the earlier case, the high court ruled that an employer must bear the full cost of attorney fees and cannot receive a credit for any amount that the union may have paid to the attorneys. The Washington Wage Claim statute allows employees, not employers, to recover their attorney fees "in any action in which any person is successful in recovering judgment for wages or salary" from either public or private employers. RCW 49.48.030.
The arbitration-fee cases involved public employers and public employee unions that negotiated contracts under state statutes applicable only to public employees. Private employers may be able to persuade the courts that federal labor law preempts Washington's Wage Claim Statute. Washington employers with union contracts can avoid the risk of an attorney-fee award in arbitration by specifying in their collective-bargaining agreements that each party will pay its own attorney fees and other expenses incurred in the arbitration while splitting the arbitrator's fee. Employers should specifically reference "attorney fees," not merely "expenses" or "costs of arbitration," in the collective-bargaining language.
The preemption defense under federal labor law is not available to employers that have arbitration agreements with individual employees. Employers utilizing arbitration agreements in individual employment contracts should specify that the prevailing party under the arbitration agreement can recover its attorney fees from the losing party, because the Wage Claim Statute authorizes fee awards to prevailing employees, not prevailing employers. If the employer does not address the issue of attorney fees in the arbitration agreement with the individual employee, a court will probably award fees under the Wage Claim Statute to a prevailing employee but deny a prevailing employer's fee request.