Arbitration Fairness Act Reintroduced

A bill that would significantly restrict the ability for employers to arbitrate employment disputes was reintroduced in the House and Senate last week. The Arbitration Fairness Act of 2011 (H.R. 1873, S. 987) – introduced by Rep. Henry “Hank” Johnson (D-GA) and Sen. Al Franken (D-MN) – would amend the Federal Arbitration Act (FAA) to invalidate all predispute arbitration agreements that require the arbitration of any employment or consumer dispute, or conflict arising under any statute intended to protect civil rights. This Act would not apply to arbitration provisions contained in collective bargaining agreements.

This legislation broadly defines “employment dispute” as “a dispute between an employer and employee arising out of the relationship of employer and employee as defined by the Fair Labor Standards Act.” The definition of “consumer dispute” is similarly broad enough to encompass a wide range of legal conflicts. If enacted, this bill would essentially eliminate arbitration as a litigation alternative for employee claims – as well as those brought by clients/customers – unless the parties agree to the arbitral forum post-dispute. The provisions of this bill would take effect on the date of enactment, and would apply to any dispute or claim arising on or after that date.

The measure would also effectively invalidate a series of recent Supreme Court decisions upholding arbitration as a legitimate means of dispute resolution. In the most recent decision issued in April of this year, the Court held that the FAA preempted a California state supreme court decision that conditioned the enforceability of a consumer arbitration agreement on the availability of class-wide arbitration.

Although the Arbitration Fairness Act was cosponsored by 62 other congressmen and 12 other senators, it is unlikely to advance this term.

Photo credit: YanC