Last Friday, new legislation known as the Forced Arbitration Injustice Repeal Act (the FAIR Act), HR 1423, was passed in the US House of Representatives. There is also a companion Senate bill, S. 610. The new legislation is aimed at giving consumers, employees, patients and those whose civil rights allegedly were violated the right to file suit in Court by invalidating any pre-dispute arbitration agreement. The FAIR Act would amend the Federal Arbitration Act to prohibit any “pre-dispute arbitration agreement or pre-dispute joint-action (class action) waiver” for any employment, consumer, antitrust or civil rights dispute. This law would overturn United States Supreme Court decisions allowing such pre-dispute agreements, including Epic Systems Corp. v. Lewis, which allows pre-dispute class action waivers.
The new legislation would guaranty workers the right to go to court, which could have devastating impact on employers because it would expose them to public scrutiny and allow claims to be decided by juries rather than arbitrators. The new legislation would invalidate previously signed arbitration agreements if the dispute arises after the legislation becomes law. There is also similar legislation pending, including the Restoring Justice for Workers Act, which also would prohibit mandatory, pre-dispute arbitration in the employment context. These proposed laws must also be approved by the Republican controlled Senate, which is probably unlikely.