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Bill to Nullify Mandatory Predispute Arbitration Agreements Passes in U.S. House

The U.S. House of Representatives has passed the “Forced Arbitration Injustice Repeal Act” (FAIR Act), which aims to nullify mandatory, predispute arbitration agreements and class-action waivers for employment, consumer protection, antitrust, and civil rights matters.

The FAIR Act, H.R. 1423, passed 225-186 in the House on September 20, 2019, largely along party lines. The bill now goes to the U.S. Senate, where its passage is far from certain. 

The FAIR Act purports to protect employees’ and consumers’ rights to pursue claims in court by:

  • Prohibiting predispute arbitration agreements that mandate arbitration of future employment claims, and other matters; and

  • Prohibiting agreements and practices that interfere with the rights of individuals, workers, and small businesses to participate in a joint, class, or collective action related to an employment, consumer, antitrust, or civil rights dispute.

To accomplish this, the FAIR Act amends the Federal Arbitration Act (FAA), 9 U.S.C. §§ 1-14, by adding a Chapter 4 and:

  • Section 401 includes broad definitions for the terms “consumer dispute,” “civil rights dispute,” “antitrust dispute,” “employment dispute,” “predispute arbitration agreement,” and “predispute joint-action waiver.”

  • Section 402 states: (a) “no predispute arbitration agreement or predispute joint-action waiver shall be valid or enforceable with respect to an employment dispute, consumer dispute, antitrust dispute, or civil rights dispute”; and (b) “[t]he applicability of this chapter to an agreement to arbitrate and the validity and enforceability of an agreement to which this chapter applies shall be determined by a court, rather than an arbitrator ….”

If enacted as currently drafted, the FAIR Act will become effective as of the date enacted “and shall apply with respect to any dispute or claim that arises or accrues on or after such date.”

Introduced by U.S. Representative Hank Johnson (D-Ga.) in February 2019, and co-sponsored by more than 220 House Democrats, the FAIR Act’s purposes include addressing concerns that sexual harassment claims are swept under the carpet by employers’ use of arbitration and confidentiality agreements, consumer rights advocates’ criticism of the widespread inclusion of arbitration provisions in consumer agreements and financial services contracts that prevent individuals from suing companies in court, and critics of the U.S. Supreme Court’s Epic Systems Corp. v. Lewis, which upheld the enforceability of predispute arbitration agreements and class action waivers in employment agreements.

Opponents of the FAIR Act maintain that it is an overly broad and hastily written bill. They said it will undermine individual and institutional rights to enter into private contracts of their choosing, increase the cost of doing business and settling disputes, lead to unnecessary litigation and burden an already taxed judicial system, and carelessly upend decades of established FAA jurisprudence.

The FAIR Act has a long way to go before it becomes law and is likely to encounter opposition in the Senate. Indeed, in February 2019, Senator Richard Blumenthal (D-Conn.) introduced a companion bill to the FAIR Act in the Senate, S.610, and that bill has already met with some resistance and may not garner enough votes to pass. Moreover, on September 17, the White House issued a Statement of Administration Policy that suggested the President will veto the FAIR Act if it reaches his desk.

Jackson Lewis P.C. © 2020

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David Golder, Jackson Lewis, wage hour dispute attorney, Fair Labor Standard Act Lawyer
Principal

David R. Golder is a Principal in the Hartford, Connecticut, office of Jackson Lewis P.C. Mr. Golder has extensive experience handling class and complex litigation, including nationwide, high-stakes wage and hour disputes. Mr. Golder defends employers in class-based, multi-plaintiff, and multi-district wage and hour class and collective actions involving claims for employee misclassification, improper payment of wages, off-the-clock work, and meal and rest break violations. Mr. Golder also provides preventive advice and counsel to employers wishing to limit their...

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Samia Kirmani, Jackson Lewis Law Firm, Unemployment Counseling Attorney
Principal

Samia M. Kirmani is a Principal in the Boston, Massachusetts, office of Jackson Lewis P.C. She concentrates her practice in employment counseling, training and litigation on behalf of management.

Ms. Kirmani provides practical legal advice to clients on various employment law issues, including discrimination, health and leave management, reductions in force, retaliation and whistleblower matters, individual separations, and employee relations issues. Ms. Kirmani also assists clients with policy creation, revision and implementation and routinely conducts management and employee trainings on topics in employment law, including sexual harassment prevention and best management practices. Ms. Kirmani also advises clients with respect to drafting and implementing national arbitration agreements.

Ms. Kirmani defends employers in employment-related litigation and administrative proceedings at the Equal Employment Opportunity Commission and the Massachusetts Commission Against Discrimination. Ms. Kirmani is a frequent speaker and addresses Legal and Human Resources audiences on current and various workplace law topics, such as paid sick leave, arbitration agreements and class action waivers, and employment discrimination.

 

617-367-0025
Of Counsel

Brendan Sweeney is Of Counsel in the Long Island, New York, office of Jackson Lewis P.C. He has more than 20 years of experience in employment law and other types of litigation.

Mr. Sweeney has helped clients achieve success in various ways including counseling, developing compliance and early case assessment programs, implementing class action waivers, defeating class certification, and negotiating favorable resolutions. He has significant experience defending employers in class actions and complex litigation, including wage and hour and discrimination matters...

631-247-4646
Associate

Stephanie L. Goutos is an Associate in the Albany, New York, office of Jackson Lewis P.C. Her practice is focused on general employment litigation and class action and complex litigation.

Prior to joining Jackson Lewis, Ms. Goutos was the Senior Attorney to the New York State Deputy Commissioner of Higher Education at the Department of Education. Ms. Goutos led negotiations with New York State teacher unions, administrative unions, and district superintendents, as well as provided counsel on a wide variety of education law issues. She has...

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Abraham Saiger, Jackson Lewis Law Firm, Labor and Employment Litigation Attorney
KM Attorney

Abraham (“Avi”) Saiger is the Knowledge Management (“KM”) Attorney for Jackson Lewis P.C.’s General Employment Litigation Practice Group, and is based in the Chicago, Illinois, office of Jackson Lewis P.C. Mr. Saiger creates and manages legal and electronic resources and materials to provide innovative client services, serves as a resource for other practice group members, monitors and analyzes regulatory and case law developments, and contributes to the firm’s blogs and legal updates. In his role, Mr. Saiger draws upon his years of litigation experience in defending...

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