## Facts

- Hobby Lobby Stores, Inc. employed the grievant as a manager in one of its retail stores.
- Hobby Lobby corporate officials began receiving two recurring categories of complaints about the manager: (1) the store was disorderly and (2) the manager treated employees poorly.
- Hobby Lobby conducted a corporate inspection that found poor store conditions.
- After the inspection, the store’s conditions improved for a period of time.
- Later, an employee submitted another complaint regarding the manager’s conduct toward employees.
- After that later complaint, Hobby Lobby terminated the manager’s employment.
- The manager was of Hispanic origin and alleged that the termination was because of his national origin, in violation of Title VII of the Civil Rights Act of 1964.
- In support of the Title VII claim, the manager asserted that non-Hispanic managers were demoted rather than terminated in similar situations and that he had been subjected to comments about his national origin.
- Hobby Lobby denied discriminatory intent and argued that the manager failed to establish a prima facie case of discrimination.
- Hobby Lobby asserted that the complaints and inspection findings were legitimate, nondiscriminatory reasons for terminating the manager.
- Hobby Lobby maintained an employee handbook stating that employment-related complaints would be submitted to arbitration.
- The manager argued that the handbook operated as a binding contract that altered at-will employment and required written notice of discipline before termination.
- The manager claimed he did not receive the required written notice before discharge.
- Hobby Lobby responded that the handbook expressly stated it was not to be construed as a contract and that Hobby Lobby reserved the right to terminate an employee without any prior warning.
- Consistent with the handbook’s dispute-resolution provision, the parties submitted the dispute to arbitration.

## Issues

1. Whether the manager established that his termination was based on national origin discrimination in violation of Title VII, including whether Hobby Lobby’s stated reasons were a cover for discrimination.
2. Whether the employee handbook created enforceable contractual limits on Hobby Lobby’s ability to terminate an at-will employee, including any requirement of written notice of discipline before termination, despite the handbook’s non-contract disclaimer and reservation of termination authority without warning.
3. Whether the handbook’s arbitration provision supplied the forum for resolving the manager’s discharge-related claims, including the Title VII and handbook-based theories.

## Decision

- The dispute was submitted to arbitration pursuant to Hobby Lobby’s employee-handbook procedure requiring arbitration of employment complaints.
- Publicly accessible summaries of this arbitration identify the claims and defenses but do not disclose the arbitrator’s ultimate ruling or any remedy.

## Legal Principles

- A Title VII discharge claim generally turns on whether the employee can show discrimination based on a protected trait and, if the employer gives nondiscriminatory reasons for discharge, whether the employee can prove those reasons are a pretext for discrimination.
- Evidence that may be offered to support an inference of discriminatory motive can include comparator proof (how similarly situated non-protected employees were treated) and comments tied to the employee’s protected status, with weight depending on context and proof.
- An employer may defend a discharge decision by pointing to workplace complaints and performance or conduct problems as legitimate, nondiscriminatory reasons.
- Employee handbooks may be argued to create contractual rights (such as progressive discipline or written notice requirements), but express disclaimers that the handbook is not a contract and provisions reserving the employer’s right to terminate without warning are commonly central to whether enforceable obligations exist.
- When an employer’s policy requires arbitration of employment complaints, the parties may present statutory and policy-based discharge claims in that arbitral forum, subject to the program’s terms and applicable law governing enforceability.

## Conclusion

In *Hobby Lobby Stores and Individual Grievant*, a Hispanic store manager challenged his discharge in arbitration, alleging Title VII national-origin discrimination and claiming that an employee handbook required written notice of discipline before termination as a binding contractual limit on at-will termination, while Hobby Lobby relied on complaints about store conditions and employee treatment and on the handbook’s non-contract disclaimer and reservation of the right to terminate without warning; the matter proceeded in arbitration under the handbook procedure, but publicly available summaries do not reveal the final disposition or remedy.


Hobby Lobby Stores and Individual Grievant, 115 Lab. Arb. Rep. 956 (2001)