Duane Morris Takeaways: The scope of claims that can permissibly be arbitrated under the Federal Arbitration Act (“FAA”) may narrow once again. Last year saw the enactment of the Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act, which amended the FAA to preclude a pre-dispute agreement to arbitrate claims involving allegations of sexual harassment or sexual assault. With that amendment, plaintiffs who file claims — either individual claims or putative class action claims — that relate to a sexual harassment or sexual assault dispute may now, at their option, pursue such claims in court and cannot be compelled to submit those claims to arbitration. Now Congress may soon consider that sort on ban for claims involving race discrimination.
Sen. Cory Booker and Rep. Hank Johnson announced plans this week to introduce a bill — the Ending Forced Arbitration of Race Discrimination Act of 2023 — to further amend the FAA to preclude arbitration of race discrimination claims. While the parameters of the proposed bill are as yet unclear, presumptively it will seek to preclude arbitration of both individual and class action race discrimination claims, and possibly more.
The Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act was initially drafted to cover all claims alleging “sex discrimination disputes,” but was then narrowed to only apply to sexual harassment and sexual assault claims. If Congress was not willing to ban arbitration of sex discrimination claims, it may not be willing to ban arbitration of race discrimination claims.
Implications For Employers
As states and Congress continue to take steps to limit the use of arbitration, it remains critical for businesses and employers to regularly review their arbitration agreements to ensure compliance with an often-changing landscape of laws.
As the FAA approaches its 100-year anniversary, its impact will be less profound if Congress continues to enact claim-specific carve outs.