Washington D.C. Employment Law Update : Washington D.C. Employment Lawyer & Attorney : Littler Mendelson Law Firm : Virginia, Tyson's Corner

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 2013 (H.R. 1844, S. 878) – 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, antitrust, 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.

As discussed in a press release, the impetus for the Arbitration Fairness Act is a series of Supreme Court cases sanctioning the use of arbitration agreements in a variety of circumstances.

Photo credit: YanC

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The U.S. Supreme Court has once again taken a position favoring the arbitration of employment-related agreements. In a summary ruling (pdf) issued on November 26, 2012, the Court vacated a decision issued by the Oklahoma Supreme Court that voided the noncompetition agreements in two employment contracts on the grounds that they were against state public policy. Applying the Federal Arbitration Act (FAA) and Supreme Court precedent interpreting the FAA, the Court found that the Oklahoma court “ignored a basic tenet” of arbitration law by not deferring the question of contract interpretation to an arbitrator.

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On March 8, 2012 Rep. Robert Andrews (D-NJ) reintroduced a bill (H.R. 4181) that would effectively ban most employment-related predispute arbitration agreements. Specifically, this bill would stipulate that:

no predispute arbitration agreement shall be valid or enforceable if it requires arbitration of an employment dispute. The term “employment dispute” means a dispute between an employer and employee arising out of the relationship of employer and employee.

The bill would exempt collective bargaining agreements from the ban on arbitration agreements, although such an agreement would not be permitted to contain a provision “waiving the right of an employee to seek judicial enforcement of a right arising under a provision of the Constitution of the United States, a State constitution, or a Federal or State statute, or public policy arising therefore.” Similar bills have been introduced over the years, but have failed to gain any traction. This most recent measure has been referred to the House Committee on the Judiciary, where it is expected to stay for the remainder of this legislative term.

Photo credit: YanC

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The Department of Defense (DoD) will issue a final rule (pdf) that extends the existing restrictions on a contractor’s use of mandatory arbitration agreements in certain instances. Currently, a provision in the DoD and Full-Year Continuing Appropriations Act bans contractors or subcontractors at any tier that receive funds appropriated by the Act for a contract in excess of $1 million from enforcing mandatory, pre-dispute agreements to arbitrate “any claim under title VII of the Civil Rights Act of 1964 or any tort related to or arising out of sexual assault or harassment, including assault and battery, intentional infliction of emotional distress, false imprisonment, or negligent hiring, supervision, or retention.” This restriction does not apply to a contractor’s or subcontractor’s agreement with employees or independent contractors that cannot be enforced in the U.S., nor does it apply to the acquisition of commercial items, including commercially available off-the-shelf items. The Secretary of Defense is permitted to waive the applicability of this prohibition to a particular contract or subcontract in the interest of national security.

The final rule extends the arbitration restrictions to large contracts awarded with funds provided under the DoD appropriations act for the year 2011 and subsequent DoD appropriations acts. A final rule implementing these restrictions for funds awarded by the 2010 DoD Appropriations Act was issued in December 2010. The final rule states that: “Since DoD anticipates that this will be an ongoing requirement, this rule applies to use of all subsequent fiscal year funds appropriated or otherwise made available under subsequent DoD appropriations acts.” If the restriction is removed at a future date, DoD notes that it will amend the Defense Federal Acquisition Regulations accordingly.

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Sen. Jeff Sessions (R-AL) has reintroduced legislation designed to encourage parties to use arbitration as a means of dispute resolution. The Fair Arbitration Act (S. 1186) would amend the Federal Arbitration Act by including a set of due process rights for participants, imposing time limits for initiating and resolving a dispute, and establishing certain requirements for arbitration clauses in contracts. Among other changes, the bill seeks to accomplish the following:

• Stipulate that arbitration clauses in contracts include, in bold, large print, capital letters, a heading announcing the arbitration agreement. To be enforceable, the agreement must state whether it is binding or optional, provide contact information where a party can get more information about the costs and fees associated with arbitration, and state that the individual retains the right to sue in small claims court for claims not exceeding $50,000.

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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.

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By Henry Lederman

In an opinion favorable to employers who use arbitration agreements, the Supreme Court in AT&T Mobility v. Concepcion (pdf) has held that the Federal Arbitration Act (FAA) preempts a California state supreme court decision that conditioned the enforceability of a consumer arbitration agreement on the availability of class-wide arbitration. Emphasizing this country’s “liberal federal policy favoring arbitration,” the Court stated that the FAA preempts the state law rule because it “stands as an obstacle to the accomplishment and execution of the full purposes and objectives of Congress.” Although the facts of this case centered on commercial contracts, the Court’s decision indirectly reaffirms the validity of including class action waivers in agreements to arbitrate employment disputes. Its central premise are that the FAA requires arbitration agreements to be enforced as written, that states (whether through their courts or legislatures) cannot erect obstacles to their enforcement, and that class waivers are wholly consistent with the purposes of the FAA - expedited, informal dispute resolution.

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Update: As expected, on April 14 the House and Senate passed the budget bill, sending the measure to the President for his signature. The Senate rejected a proposed resolution that would have de-funded the Affordable Care Act.

The eleventh-hour budget deal reached on April 8, 2011 would impact a number of healthcare and employment-related programs. Overall, the Department of Defense and Full-Year Continuing Appropriations Act of 2011 (H.R. 1473), (pdf) commonly referred to as the continuing resolution (CR) to fund the federal government though September 30, 2011, cuts approximately $13 billion in appropriations from the President’s funding request for the U.S. Departments of Labor, Education, and Health and Human Services. Some initiatives are extended under the measure, while others are reduced or eliminated entirely. A full list of the program cuts can be found here. (pdf)

Health Care

Among other casualties (pdf) of the budget deal are two programs created by the Affordable Care Act – the Consumer Operated and Oriented Plan (CO-OP) and the Free Choice Voucher programs. The CO-OP program was designed to foster the creation of qualified nonprofit health insurance issuers that would have offered qualified health plans in the individual and small group markets. These plans were intended to compete with the private insurance market.

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The U.S. Department of Defense (DoD) will issue a final rule (pdf) implementing section 8116 of the DoD Appropriations Act for Fiscal Year 2010, which restricts a contractor’s use of mandatory arbitration agreements in certain instances. Specifically, section 8116 bans contractors or subcontractors at any tier that receive funds appropriated by the Act for a contract in excess of $1 million from enforcing mandatory, pre-dispute agreements to arbitrate “any claim under title VII of the Civil Rights Act of 1964 or any tort related to or arising out of sexual assault or harassment, including assault and battery, intentional infliction of emotional distress, false imprisonment, or negligent hiring, supervision, or retention.” After June 17, 2010, contractors are required to certify compliance by their subcontractors. The Secretary of Defense is permitted to waive the applicability of this prohibition to a particular contract or subcontract in the interest of national security. Additionally, the arbitration limitations do not apply to a contractor’s or subcontractor’s agreement with employees or independent contractors that cannot be enforced in the U.S., nor do they apply to the acquisition of commercial items, including commercially available off-the-shelf items.

The final rule adopts the interim rule issued in May 2010 with certain minor changes. Specifically, the final rule further explains the DoD waiver process and the conditions under which the DoD’s waiver authority will be exercised. The DoD’s waiver determination will “set forth the grounds for the waiver with specificity, state any alternatives considered, and explain why each of the alternatives would not avoid harm to national security interests.” The final rule is effective as of the date of publication in the Federal Register, which is scheduled for December 8, 2010.

Photo credit: Damir Cudic

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On Tuesday the U.S. Supreme Court heard oral arguments (pdf) in a case that could significantly impact class action litigation. The issue before the Court in AT&T Mobility v. Concepcion (09-893) is whether the Federal Arbitration Act (FAA) preempts states from conditioning the enforceability of an arbitration agreement on the availability of class-wide arbitration when that procedure is not necessary to ensure that parties to the agreement are able to vindicate their claims.

The dispute in this matter involved a consumer contract for wireless telephone services that contained both an agreement to arbitrate disputes and a class action waiver clause. In response to a putative class action filed by the Concepcions, the company sought to compel individual arbitration pursuant to the arbitration agreement and class action waiver the plaintiffs had signed.  The arbitration agreement at issue provided a number of pro-consumer terms, including the following: the company would pay all arbitration fees for non-frivolous complaints; the arbitration itself would be conducted in the county of the customer’s billing address; an allowance would be provided for the claimant to proceed in small claims court; the company would provide double the amount of attorneys’ fees and $7,500 if the ultimate arbitration award exceeded the company’s settlement offer; and a waiver of the company’s right to attorneys’ fees in the event it prevailed on the matter.

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Update:  On July 21, 2010, President Obama signed this bill into law.

On Thursday, the Senate voted 60-39 to pass the Dodd-Frank Wall Street Reform and Consumer Protection Act (H.R. 4173), the sweeping financial overhaul legislation otherwise known as the “Wall Street” reform bill. While the measure focuses on banking reform and consumer protection, it contains a number of provisions impacting the regulation of executive compensation in publicly-traded companies, limiting the imposition of mandatory arbitration agreements in certain situations, and expanding whistleblower protections for employees and other individuals who report securities law violations. The House passed this measure on July 1 after congressional committee members finalized the conference report reconciling varying versions of the bill. A full discussion of this measure’s provisions affecting the workplace can be found here. Earlier in the day, the Senate voted 60-38 to end debate on the bill, allowing the final vote to occur. Republicans Olympia Snowe (R-ME), Susan Collins (R-ME) and Scott Brown (R-MA) joined 57 Democrats to vote in the bill’s favor. Senator Russ Feingold (D-WI) was the only Democrat to vote against it. President Obama is expected to sign the bill into law as early as this afternoon.

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On Wednesday, the House voted 237-192 to approve the Dodd-Frank Wall Street Reform and Consumer Protection Act (H.R. 4173), the massive financial overhaul legislation otherwise known as the “Wall Street” reform bill. As previously discussed, this measure contains a number of provisions – including those impacting arbitration, executive compensation, and whistleblower protection – that would affect the workplace. Earlier in the week, supporters scrambled to revise the conference report (pdf) to find alternative means of paying for the $19 billion measure in order to gain sufficient votes for passage. In a compromise move, lawmakers decided to, among other things, end the Troubled Asset Relief Program (TARP) earlier than scheduled. Although President Obama had said he hoped to sign the final bill before the Fourth of July break, it is unlikely that the Senate will begin consideration of the bill before it reconvenes on July 12.

Photo credit:  MBPHOTO, INC.

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On June 21, 2010, the United States Supreme Court ruled in favor of Rent-A-Center (“RAC”) in Rent-a-Center v. Jackson. (pdf)  In a 5-4 decision, the Supreme Court reaffirmed that the Federal Arbitration Act (FAA) permits parties to delegate authority to an arbitrator to determine whether the contract at issue is unconscionable.

When he was hired by RAC, Antonio Jackson signed an agreement to arbitrate claims arising from his employment instead of going to court. The agreement also required that any challenges to its enforceability likewise must be submitted to an arbitrator for decision. The agreement expressly stated that:

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Last week, House and Senate committee members agreed to the terms of the Dodd-Frank Wall Street Reform and Consumer Protection Act (H.R. 4173), otherwise known as the “Wall Street” or “Financial Reform” bill. Now that the 2,319-page conference report (pdf) has been filed, both chambers will need to vote on the final measure. While the bulk of this massive overhaul bill deals with banking regulation and consumer protection, it does contain other provisions that impact the workplace. A number of sections address executive compensation regulation, arbitration limitations, and provisions that extend and strengthen current whistleblower protection laws. A summary of these provisions follows.

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On June 24, 2010, the U.S. Supreme Court issued a pro-employer opinion in Granite Rock, Inc. v. International Brotherhood of Teamsters, et al., (pdf) providing valuable guidance on the arbitrability of disputes over the timing of the formation of collective bargaining agreements.

The Court (7-2) held that the question of exactly when the parties formed an agreement to arbitrate certain disputes was not itself subject to resolution through arbitration. The Court also declined to recognize Granite Rock’s cause of action under Section 301 of the Labor Management Relations Act (LMRA) against the International Brotherhood of Teamsters’ (IBT) for tortious interference with a collective bargaining agreement. The Court remanded the case to the lower court to allow Granite Rock to proceed against the International on the theory that the local union was acting as the IBT’s agent when it refused to abide by the no-strike clause of the parties’ collective bargaining agreement.

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The National Labor Relations Board’s (NLRB) general counsel (GC) has issued guidance (pdf) to the agency’s regional officers and directors on how to process unfair labor practice (ULP) charges involving employee class action waivers in mandatory arbitration agreements. The GC explained that questions have arisen “regarding the validity of mandatory arbitration agreements that prohibit arbitrators from hearing class action employment claims while at the same time requiring employees to waive their right to file any claims in a court of law, including class action claims.” In essence, the GC concluded that such class action waivers do not per se violate the National Labor Relations Act’s (NLRA) provisions allowing employees to engage in protected, concerted activity, but that certain principles must be followed.

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The U.S. Supreme Court has agreed to determine whether the Federal Arbitration Act (FAA) preempts states from conditioning the enforceability of an arbitration agreement on the availability of class-wide arbitration when that procedure is not necessary to ensure that parties to the agreement are able to vindicate their claims. The case at issue – AT&T Mobility v. Concepcion (09-893) – concerns a consumer contract for wireless telephone services that contained both an agreement to arbitrate disputes and a class action waiver clause. While this matter deals with the viability of an arbitration provision in a consumer contract, the Supreme Court’s decision may impact such provisions in employment agreements as well.

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On Thursday evening, the Senate approved by a 59-39 margin the Restoring American Financial Stability Act of 2010, the massive financial reform bill commonly referred to as “Wall Street Reform” legislation. Earlier that day, the chamber was able to secure the 60 votes needed to limit debate on the measure, after failing to do so on Wednesday. Although the bulk of this legislation focuses on banking regulation and consumer financial protection, a handful of the bill’s provisions and amendments touch on employment-related issues.

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The Department of Defense (DoD) will publish in tomorrow’s edition of the Federal Register an interim rule (pdf) implementing section 8116 of the DoD Appropriations Act for Fiscal Year 2010, which restricts a contractor’s use of mandatory arbitration agreements in certain instances. Specifically, section 8116 bans contractors or subcontractors at any tier that receive funds in excess of $1 million from the appropriations bill from enforcing mandatory, pre-dispute agreements to arbitrate “any claim under title VII of the Civil Rights Act of 1964 or any tort related to or arising out of sexual assault or harassment, including assault and battery, intentional infliction of emotional distress, false imprisonment, or negligent hiring, supervision, or retention.” The Secretary of Defense is permitted to waive the applicability of this prohibition to a particular contract or subcontract in the interest of national security. Additionally, the arbitration limitations do not apply to a contractor’s or subcontractor’s agreement with employees or independent contractors that cannot be enforced in the U.S.

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The U.S. Supreme Court has held that the Federal Arbitration Act (FAA) does not authorize arbitrators to impose class arbitration on parties to a dispute when the arbitration agreement itself is silent on the matter. In Stolt-Nielsen SA v. AnimalFeeds International Corp. (pdf) the Court found that an arbitration panel exceeded its powers under the FAA by permitting class arbitration on public policy grounds instead of identifying and applying an appropriate rule of law applicable to the situation. The Court reasoned that parties cannot be compelled to submit to class arbitration unless they have contractually agreed to do so.

For more information on this decision and its implications for employment agreements with arbitration provisions, see Littler’s ASAP: Supreme Court Rules Class Action Arbitrations Impermissible Absent Express Agreement by Henry D. Lederman.

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On Friday, the U.S. Supreme Court agreed to resolve whether a court or an arbitrator has jurisdiction to determine if an arbitration agreement is unconscionable, even when the parties to the contract have clearly and unmistakably given such authority to the arbitrator. In Rent-A-Center West, Inc. v. Jackson (No. 09-497), Antonio Jackson entered into an agreement with his employer, Rent-A-Center (RAC), in which both parties agreed to arbitrate claims arising out of the employment relationship. This agreement expressly stated that:

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On Saturday, the Senate approved by a vote of 88 to 10 the final version of the FY 2010 Defense Appropriations Bill (H.R. 3326). Embedded in this $636 billion spending measure is the contentious amendment submitted by Sen. Al Franken (D-Minn.) that restricts federal contractors and subcontractors working on large defense projects funded by the appropriations bill from requiring their employees and independent contractors to sign, as a condition of employment, agreements to arbitrate certain employment-related claims. The Senate first agreed to include a limit on arbitration in the appropriations bill in October. The House passed the amended spending bill last Wednesday.

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The House of Representatives approved a defense spending bill by a vote of 395 to 34 that extends jobless benefits as well as prevents most defense contractors and subcontractors from forcing their employees or independent contractors to sign, as a condition of employment, agreements to arbitrate certain employment-related claims. The Senate approved this provision – introduced by Sen. Al Franken (D-Minn.) as an amendment to the Fiscal Year 2010 Department of Defense Appropriations Act (pdf) (H.R. 3326) – in October.

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Today, the Supreme Court released its opinion in Union Pacific Railroad Co. v. Brotherhood of Locomotive Engineers And Trainmen General Committee of Adjustment, Central Region (pdf), which involved the ability to challenge a final decision by the National Railroad Adjustment Board (NRAB) under the Railway Labor Act (RLA). The Court declined to answer whether a final decision by the NRAB could be set aside for an alleged due process violation, instead affirming the Seventh Circuit’s granting of relief to the union challenging the NRAB’s dismissal of its arbitration petition on statutory grounds.

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The Senate approved by a vote of 68 – 30 an amendment (S.A. 2588) to the defense appropriations bill (H.R. 3326) that would prohibit federal contractors or subcontractors receiving defense department funds from forcing their employees or independent contractors to sign, as a condition of employment, agreements to arbitrate certain employment-related claims. Specifically, the amendment bans contractors or subcontractors at any tier that receive funds from the appropriations bill from enforcing mandatory, pre-dispute agreements to arbitrate “any claim under title VII of the Civil Rights Act of 1964 or any tort related to or arising out of sexual assault or harassment, including assault and battery, intentional infliction of emotional distress, false imprisonment, or negligent hiring, supervision, or retention.” The provisions of this amendment would not apply to employment contracts that are not enforceable in this country.

The appropriations bill including the above amendment was approved by a vote of 93-7. This version of the bill will now need to be reconciled with that approved by the House in July.

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On Tuesday, the Senate is scheduled to vote on an amendment (S.A. 2588) to the Defense Appropriations Bill (H.R. 3326) that would effectively prevent federal contractors or subcontractors at any tier that receive funding under the appropriations bill from using mandatory pre-dispute binding arbitration agreements with their employees or independent contractors in civil rights and sexual harassment matters.  Introduced by Senators Al Franken (D-Minn.) and Mary Landrieu (D-La.), the amendment would insert the following provision into the appropriations bill:

Sec. 8104. (a) None of the funds appropriated or otherwise made available by this Act may be used for any existing or new Federal contract if the contractor or a subcontractor at any tier requires that an employee or independent contractor, as a condition of employment, sign a contract that mandates that the employee or independent contractor performing work under the contract or subcontract resolve through arbitration any claim under title VII of the Civil Rights Act of 1964 or any tort related to or arising out of sexual assault or harassment, including assault and battery, intentional infliction of emotional distress, false imprisonment, or negligent hiring, supervision, or retention.

(b) The prohibition in subsection (a) does not apply with respect to employment contracts that may not be enforced in a court of the United States.
 

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Senator Patrick Leahy (D-VT), chairman of the Senate Judiciary Committee, announced on Tuesday that his committee will hold a hearing to examine two U.S. Supreme Court decisions that benefit employers. The hearing, “Workplace Fairness: Has the Supreme Court Been Misinterpreting Laws Designed to Protect American Workers from Discrimination,” will undertake a review of the Court’s 2001 decision in Circuit City Stores v. Adams, which extended the scope of the Federal Arbitration Act (FAA) to cover employment contracts, and thus sanctioned certain mandatory pre-dispute arbitration agreements, and the more recent opinion in Gross v. FBL Financial Services, Inc. (pdf), which toughened an employee’s burden of proof in bringing a mixed-motive discrimination claim under the Age Discrimination in Employment Act (ADEA). 

Among the witnesses scheduled to testify at the October 7 hearing is the plaintiff in Gross v. FBL Financials Services, Inc. The Court in this case held that a plaintiff bringing an ADEA claim must show by a preponderance of the evidence that age was the “but for” cause of the employer’s adverse employment decision. Unlike in Title VII discrimination cases, an employer does not need to prove that it would have made the same decision regardless of age, even if the employee were to produce some evidence that age may have been a contributing factor in the decision. In July, Rep. George Miller (D-CA), chairman of the House Education and Labor Committee, criticized this decision and also called for a committee hearing to examine its repercussions. Both Miller and Leahy have likened Gross to Lilly Ledbetter v. Goodyear Tire, a pay discrimination case that was subsequently overruled by the Lilly Ledbetter Fair Pay Act, signed into law earlier this year. Following next week’s hearing, it is possible that legislation to overturn the Supreme Court’s opinion in Gross will be introduced. Bills aimed at invalidating mandatory, predispute arbitration agreements validated by the Circuit City decision have already been introduced this session, but have thus far received little attention.

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On June 15, 2009, the United States Supreme Court granted certiorari in Stolt-Nielsen S.A. v. AnimalFeeds International Corp., 548 F. 3d 85 (2d Cir. 2008), cert. granted, 129 S. Ct. 2793 (2009). The question before the Supreme Court is whether an arbitration agreement that is “silent” on the question whether class arbitrations are permitted can ever be construed to permit such arbitrations.

The Second Circuit Court of Appeals had imposed class-wide arbitration on Stolt-Nielsen despite the silence of the underlying agreement to arbitrate on the question whether class arbitrations were permissible. Stolt-Nielsen asked the High Court to decide whether permitting class arbitration even when an agreement to arbitrate is silent on the issue violates the fundamental principle of the Federal Arbitration Act (9 U.S.C. §1 et seq.) (FAA) that courts must enforce arbitration agreements in accordance with their terms. Basically, Stolt-Nielsen argued, if an agreement is silent on something as significant as requiring a party to submit to a class proceeding and class-wide relief, how could that party ever have contemplated such to be the outcome? Silence, Stolt-Nielsen argued, cannot be construed to authorize something that the parties never agreed to, and indeed the FAA forbids courts from writing substantive terms into agreements that the parties did not themselves include.

If the Supreme Court agrees with Stolt-Nielsen, the implications might be far reaching. For one thing, if under the FAA an agreement that is “silent” on the question of class arbitration may not be interpreted as permitting such arbitration, then would the FAA preempt courts from ruling that express arbitral class waivers are unconscionable or otherwise unenforceable? Even if the Court rules that a silent agreement does not prohibit class arbitration, it may also touch on issues related to the enforceability of express class waivers. For example, if a “silent” agreement is open to interpretation, then an agreement containing an express class waiver may leave nothing to the imagination, and if the FAA requires that such an agreement be enforced as written, decisions refusing to enforce express class waivers may be undermined substantially.

Of course, application of the rules of contract interpretation do not necessarily answer the question of contract validity or enforceability, but if the Supreme Court structures its opinion around the mandates of the FAA, principles of federal preemption may require that express class waivers be enforced, contrary state public policies notwithstanding.

This entry was written by Henry D. Lederman.

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Senator Russ Feingold (D-WI) has reintroduced the Arbitration Fairness Act (S. 931), a bill that would render unenforceable predispute agreements mandating arbitration of employment, consumer, franchise or civil rights claims. A similar bill was introduced in the House by Rep. Henry Johnson (D-GA) on February 12 (H.R. 1020).  The Senate bill, however, contains an additional provision that would expressly overturn the recent Supreme Court decision in 14 Penn Plaza L.L.C v. Pyett, in which the Court held that a provision in a collective bargaining agreement that clearly and unmistakably requires union members to arbitrate Age Discrimination in Employment Act (ADEA) claims is enforceable as a matter of federal law.  According to a press release issued by Sen. Feingold, the terms of the bill would not prohibit pre-dispute arbitration clauses in collective bargaining agreements, but would reverse Penn Plaza “to make it clear that such agreements may not waive employees’ rights to take federal and state statutory or constitutional claims to court.”

This bill has been referred to the Senate Committee on the Judiciary.
 

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In an opinion released today, the U.S. Supreme Court in 14 Penn Plaza L.L.C v. Pyett held that a provision in a collective bargaining agreement that clearly and unmistakably requires union members to arbitrate Age Discrimination in Employment Act (ADEA) claims is enforceable as a matter of federal law.

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A bill introduced on February 12 would significantly restrict the ability for employers to arbitrate employment disputes. The Arbitration Fairness Act of 2009 (H.R. 1020) -- introduced by Rep. Henry “Hank” Johnson (D-GA) and cosponsored by 36 others – would amend the Federal Arbitration Act to invalidate all predispute arbitration agreements that require the arbitration of any employment, consumer, or franchise 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 definitions of “consumer dispute” and “franchise dispute” are similarly broad enough to encompass virtually any legal conflict. 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.

This bill has been referred to the House Committee on the Judiciary.
 

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