A bill introduced in the United States Senate late last month will, if passed, prohibit mandatory, pre-dispute arbitration agreements in employment. Senate Bill 931, also known as the Arbitration Fairness Act of 2009 (AFA) was introduced by Sen. Russ Feingold (D-Wis.) and seven co-sponsors. A similar bill, HR 1020, was introduced in the House of Representatives by Rep. Hank Johnson (D-Ga.) and 36 co-sponsors.
If passed, the AFA will amend the Federal Arbitration Act (FAA), and will apply only to disputes or claims arising on or after the date of enactment. Why the AFA? Sponsors and supporters believe that while arbitration is a good way to settle disputes, pre-dispute arbitration agreements in employment are unfair. For more details, click here to read Sen. Feingold's press release on the AFA.
It would not surprise us if the AFA becomes law this term. If so, employers will no longer be able to require employees to agree to resolve employment disputes through arbitration. As a result, more cases will go to the state and federal courts and employers will pay more to resolve workplace disputes.