On March 3, 2022, President Biden signed the Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act of 2021 into law. The name of the new law speaks for itself. Victims of sexual harassment or sexual assault at work that previously signed arbitration agreements can arbitrate their claims but don’t have to.
With the ink barely dry on this new #MeToo law, the House introduced a bill late last week called the “Forced Arbitration Injustice Repeal Act of 2022” or the “FAIR Act of 2022.”
What is the FAIR Act?
The FAIR Act would void any pre-dispute arbitration agreement or pre-dispute class-action waiver for an employment dispute or a civil rights dispute. In other words, we have no more arbitration for employees.
Many have criticized arbitration as a way for employers to abuse their bargaining power to avoid the publicity of employment claims in federal or state court. Most recently, former Miami Dolphins head coach Brian Flores, who is suing his former employer, along with the New York Giants, Denver Broncos, and the National Football League, has maligned the Dolphins’ apparent desire to enforce its arbitration agreement with him. Not surprisingly, Mr. Flores supports the Fair Act too.
The plaintiff’s bar also supports the FAIR Act, which it says will end the “insidious corporate practice of forcing workers and consumers to give up their rights by mandating them to address disputes in secret, one-sided arbitration proceedings.”
Good for employees? Or just their lawyers?
Some say that the FAIR Act would lead to more class-action lawsuits and, therefore, the potential for larger attorney’s fees awards to employee-rights attorneys. This point was not lost on the U.S. Chamber of Commerce, which does not support the FAIR Act.
“Should [the FAIR Act] become law,” writes the Chamber in this letter to the House, “this bill would not benefit claimants and would instead produce more class-action lawsuits to the benefit of the lawyers who bring them . . . Studies have shown that class action settlements frequently provide, at best, a very low return to class members while class action attorneys take in millions of dollars.”
What chance does the FAIR Act have?
There are 203 co-sponsors of the FAIR Act in the House. Technically, there is bipartisan support. Rep. Gaetz, Matt [R-FL-1] has co-sponsored the bill. Either way, there are enough votes in the House to pass the bill on party lines.
But the FAIR Act in its current form will likely die in the Senate. The Senate has 50 Democrats. Cloture (i.e., ending a filibuster) takes 60 votes. Even with cloture, it’s not clear whether there are enough votes to pass the Fair Act in the Senate.
So, keep an eye on this legislation — I’ll do it for you — but don’t go tearing up your arbitration agreements just yet.
What do you think of the FAIR Act?