July 5, 2022

Volume XII, Number 186

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July 05, 2022

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U.S. House Passes Bill that Places Future of Arbitration Agreements at Risk

It’s only been two weeks since President Biden signed the Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act of 2021 (the “Ending Forced Arbitration Act”) into law (which we covered here), and there is already a new major development in the world of arbitration. Yesterday, the U.S. House passed the Forced Arbitration Injustice Repeal (“FAIR”) Act of 2022 (H.R. 963), which puts the future of many, if not all, arbitration agreements in jeopardy.

The potential consequences of this act are far-reaching and extend well beyond employment matters. The FAIR Act, if passed, would invalidate predispute arbitration agreements in employment, consumer, antitrust, and civil rights disputes. It would also prohibit agreements and practices that prevent individuals from participating in a class or collective action in such matters. As a result, arbitration agreements and class action waivers would be prohibited in a wide variety of agreements, implicating anything from an employment contract to a credit card agreement.

If passed, the law will be effective on the date it’s enacted, but will not apply retroactively (so, existing arbitration agreements would stand). It also would only invalidate predispute arbitration agreements, so arbitration agreements entered into after a dispute arises would also remain enforceable – which is cold comfort for employers because most employees refuse to agree to arbitration after a dispute has arisen. Additionally, the bill provides that any dispute over whether its provisions apply will be decided in federal court, not by an arbitrator, and that the prohibition does not apply to collective bargaining agreements.

That all being said, the FAIR Act faces an uphill battle before becoming law. It is substantially broader than the recently passed Ending Forced Arbitration Act, which only applied to arbitration and class action waivers in sexual harassment and sexual assault cases. And while the Ending Forced Arbitration Act passed the House with a 335-97 vote and noted bipartisan support, the FAIR Act vote was much closer—it narrowly passed by a margin of 222-209.

We will continue to monitor this bill and provide updates as developments occur.

© 2022 Proskauer Rose LLP. National Law Review, Volume XII, Number 78
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About this Author

Anthony J Oncidi, Employment Attorney, Proskauer Rose Law Firm
Partner

Anthony J. Oncidi heads the Labor & Employment Law Group in the Los Angeles office. Tony represents employers and management in all aspects of labor relations and employment law, including litigation and preventive counseling, wage and hour matters, including class actions, wrongful termination, employee discipline, Title VII and the California Fair Employment and Housing Act, executive employment contract disputes, sexual harassment training and investigations, workplace violence, drug testing and privacy issues, Sarbanes-Oxley claims and employee raiding and trade secret protection....

310-284-5690
Evandro Gigante Labor and Employment Lawyer Proskauer Rose Law FIrm
Partner

Evandro Gigante is a partner in the Labor & Employment Law Department and co-head of the Employment Litigation & Arbitration group and the Hiring & Terminations group. He represents clients through a variety of labor and employment matters, including allegations of sexual harassment, race, gender, national origin, disability and religious discrimination. Evandro also counsels employers through reductions-in-force, employee relations issues and other sensitive employment matters.

With a focus on discrimination and harassment claims,...

212.969.3132
Allan Bloom, Litigation Attorney, Proskauer Rose Law Firm
Partner

Allan Bloom is an experienced trial lawyer who represents management in a broad range of employment and labor law matters. He has successfully defended a number of the world’s leading financial services, investment management, technology, consumer products, telecommunications, publishing, insurance, construction, and lodging companies, as well as global law firms and cultural institutions, against claims for unpaid wages, employment discrimination, breach of contract, and wrongful discharge, both at the trial and appellate court levels.

212.969.3880
Law Clerk

Morgan Peterson is a law clerk in the Labor Department and a member of the Employment Litigation & Arbitration Group.

310-557-5617
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