We recently reported that the Senate passed a #MeToo bill that banned the use of mandatory arbitration agreements for sexual harassment and sexual assault claims. This bill was signed into law by President Biden on March 3, 2022. On March 17, 2022, the House took it a step further and voted 222-209 to pass the Forced Arbitration Injustice Repeal Act (H.R. 963).
Why ban mandatory arbitration?
The FAIR Act would void all pre-dispute mandatory arbitration agreements in employment, antitrust, consumer and civil rights matters. Supporters of
the bill assert that this bill brings uniformity for employment discrimination claims as those asserting racial discrimination, unequal pay, etc. would no longer be required to arbitrate.
The prohibition on mandatory arbitration would apply to claims, including class actions, that:
- arise between consumers and sellers;
- relate to a work relationship;
- allege federal or state antitrust laws; or
- allege a violation of federal or state antidiscrimination laws.
Unlike the #MeToo bill, the FAIR Act does not have broad bipartisan support, with only one Republican sponsor. The Act also contains a specific stipulation that it does not prevent parties from voluntarily agreeing to arbitration after a dispute arises. The Act covers any dispute or claim that arises or accrues on or after the enactment date.
The outlook for passage in the Senate is uncertain because of the bill’s broad scope. Though, the White House has indicated they strongly support the bill. If passed, courts likely will see a large increase in lawsuits. The Congressional Budget Office estimates that, if passed, there will be several hundred additional lawsuits in federal court.