Your employees’ arbitration agreements may look a lot different soon (all crumpled up in a trash can)


On Wednesday, U.S. Senator Kirsten Gillibrand (D-NY), Senate Judiciary Committee Ranking Member Lindsey Graham (R-SC), Senate Judiciary Committee Chair Dick Durbin (D-IL), and Representative Nancy Mace (R-SC) announced the introduction of the bipartisan Protecting Older Americans Act. The legislation would invalidate forced arbitration clauses that require employees to arbitrate claims of age discrimination, whether for disparate treatment, disparate impact, harassment, and retaliation.

The new legislation would apply to age claims arising under federal, state, or tribal law, whether filed individually or as a class. Individuals would have the option who have signed arbitration agreements would have the option, but not the obligation, to arbitrate claims of age bias against employers.

If the new law passes — more on this in a bit — a court, rather than an arbitrator, would decide whether a claim falls within its scope. And it would only apply to new claims. Anything pending in arbitration now can stay there.

So, will this new legislation become law? I’d bet on it.

First, the legislation is bipartisan. Second, one of the faces of the bill is Gretchen Carlson, the former Fox News personality who was galvanizing force behind the Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act of 2021, which President Biden signed into law last year. Victims of sexual harassment or sexual assault at work that previously signed arbitration agreements can arbitrate their claims but don’t have to.

Ms. Carlson also backed the Speak Out Act, which voids any nondisclosure and nondisparagement clauses found in pre-dispute contracts or agreements concerning conduct alleged to constitute sexual harassment or sexual assault. President Biden also signed that into law.

But other similar legislation unaffiliated with Carlson has stalled out. For example, the House introduced the Forced Arbitration Injustice Repeal Act of 2022. The FAIR Act would void any pre-dispute arbitration agreement or pre-dispute class-action waiver for an employment or civil rights dispute. In other words, employees would not have to arbitrate any claims. It passed the House but died in the Senate.

Earlier this year, we got the eponymous “Ending Forced Arbitration of Race Discrimination Act of 2023.” Mind you, it was only introduced in the House and Senate a little over a month ago, but there’s been no action taken since.

Whether it’s the “Carlson Effect” or something else, there is a clear trend toward eliminating arbitration of employment claims.

Those of you who have arbitration agreements with your employees should track these legislative efforts closely and consider alternatives. For example, in many states, employers and employees can agree to litigate discrimination claims without a jury. Yes, those matters may attract the publicity that arbitration helps to avoid. But bench trials mitigate the risk of runaway juries.

Amirite, Starbucks?

I’ll keep you updated on the status of the Protecting Older Americans Act.

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