On March 27, 2022, the US House of Representatives passed the Forced Arbitration Injustice Repeal (FAIR) Act, which now goes to the Senate for consideration. If signed into law, the FAIR Act would prohibit enforcement of arbitration agreements covering employment, consumer, antitrust or civil rights disputes. This would expressly cover employment discrimination claims, which are defined in the Act as civil rights disputes.
The Fair Act Expands Other Recent Legislation
The FAIR Act would dramatically expand the recently passed Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act of 2021, which was signed into law by President Biden in March 2022. This law prohibits forced arbitration of sexual harassment or sexual assault claims. The FAIR Act would vastly expand the scope of the arbitration prohibition to all employment claims (including discrimination and retaliation), consumer disputes, and prohibit restrictions on class action claims. Critics of the Act claim that it would deprive workers of a more speedy and efficient means of resolving employment disputes, as arbitration generally must be paid for by the employer, and typically results in more prompt resolution of these disputes that court litigation.
One of the bill’s sponsors, Congressman David Cicilline, however, describes the problem with arbitration: “This outrageous practice lacks the procedural safeguards of our judicial system, is not subject to oversight, has no judge or jury, and is not bound by the laws passed by Congress or the states. It is nothing short of a corporate takeover of our nation’s systems of laws, affecting nearly every American, and cannot allowed to continue.”
Chances of Senate Passage
The Fair Act narrowly passed the House of Representatives by a 222-209 margin (in contrast to the 335-97 passage margin of the Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act) and therefore faces what has been described as an “uphill battle” in the Senate. If passed, President Biden would certainly sign the Fair Act into law.
Does This Potential Development Impact the Enforceability of Existing Arbitration Agreements?
If passed, the Fair Act would only apply prospectively, and only to disputes arising after passage. It also expressly exempts collective bargaining agreements, so any required arbitration of union-related disputes would not be covered.
Counsel for current employees subject to arbitration agreements, however, need to understand that the terms of any required arbitration process, in order to be enforceable, must be procedurally fair to the affected employee (in terms of cost and discovery), and, most importantly, not limit the remedies available to employees when they prevail (including the payment of all compensatory damages and prevailing party fees and costs). If these safeguards aren’t present, the enforcement of any arbitration requirement can and should be challenged.
If the FAIR Act does not become law, Schaefer Halleen lawyers remain committed to successfully pursuing employment claims (including discrimination and retaliation) through the required (and currently enforceable) arbitration process. We have had great success in this process on behalf of clients and against large corporation requiring arbitration, and will never be deterred when this process is required.
We are hopeful, however, that the FAIR Act becomes law, and that our court system (and judges and juries) are available to all employee seeking to hold employers fully accountable.