The laws that impact arbitration agreements are changing rapidly and it can be hard to keep up with the latest developments. Here are some recent federal developments that employers should pay attention to with respect to their arbitration agreements.
On March 3, 2022, President Biden signed the Act into law, amending the Federal Arbitration Act (“FAA”) to invalidate pre-dispute arbitration agreements and joint-action waivers with respect to cases that relate to sexual assault or sexual harassment, at the election of the party alleging such conduct. The Act also invalidates delegation clauses (provisions that would delegate determinations about the applicability of the Act to an arbitrator) for these two types of disputes, and states that any issue as to whether the Act applies to a dispute will be determined by a court under Federal law.
This bipartisan bill was first introduced in 2017 by Sen. Kirsten Gillibrand (D-N.Y.) in response to the #MeToo Movement. Sen. Gillibrand reintroduced it last year alongside Lindsey O. Graham (R-S.C.). Key features of the new law include:
The Act does not necessarily require employers to implement revised arbitration agreements—but arbitration agreements may not be enforceable as to these specified disputes if the plaintiff elects not to proceed with arbitration. Now is a good time for employers to review their arbitration agreements with counsel to ensure existing language is consistent with, and takes into consideration, this new law.
On March 17, the House of Representatives passed the FAIR Act (H.R. 963), which would amend the FAA to ban pre-dispute arbitration agreements and pre-dispute joint action waivers in employment, consumer, antitrust, or civil rights disputes. If signed into law, the FAIR Act would represent a dramatic shift for employment-related arbitration programs. It is not clear whether there would be enough bipartisan support to get the votes necessary to pass in the Senate (the Ending Forced Arbitration Act passed the House with a 335-97 vote demonstrating broad bipartisan support, but the FAIR Act vote was much closer—222-209). Employers should continue to monitor the FAIR Act as it wends its way through Congress, because if passed, it could completely change the employment arbitration landscape.