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What is the FAIR (Forced Arbitration) Act?

The Forced Arbitration Injustice Repeal Act would ban companies from compelling workers to private arbitration in order to resolve legal disputes with the companies. Originally, the U.S. House of Representatives voted to pass the FAIR Act September 20th, 2019. But, when the bill was initially proposed it unfortunately didn’t make it all the way through. After gaining a Democratic majority in the senate, the bill was revived in February 2021 and has even more supporters than before.

What is an Arbitration Agreement?

Arbitration agreements are usually placed in employment and consumer contracts. These clauses make it impossible to sue your employer in court, and force employees to instead pursue their claim in private arbitration with no judge, jury, or government oversight.

Companies usually include these arbitration clauses within the many documents that they require new employees to sign in order to receive a paycheck. Approximately 60 million American workers have signed these arbitration agreements, and have essentially given up their rights to go to court against their employer. Many of them has signed it without even knowing because the documents are purposely “hidden” among other forced onboarding paperwork.

This system not only affects the ability to take their employer to court for wage theft, overtime violations, or minimum wage violations. It also can limit the way that employees bring sexual harassment and discrimination claims against their employers.

The use of arbitration agreements has been extended dramatically since it’s start. With many Supreme Court decisions that expand the applicability of these clauses, companies have been using them more and more. In 2017, the Supreme Court ruled that employers are allowed to potentially prohibit class-action claims from employees in arbitration. This decision only incentivizes companies to add arbitration clauses to their employment contracts and ultimately can hurt workers.

What is Private Arbitration?

Private arbitration is a system that favors the employers in many ways. While companies claim that it’s a quicker, less expensive forum, there are many other incentives for companies to compel arbitration. Private arbitration means that behavior that would otherwise be made public in court is not made public. Another incentive is that arbitrators are more likely than jurors to rule in favor of the employing company and when they do rule in favor of employees, arbitrators are more likely to give smaller awards than jurors are.

While the passage through the House was a big win, the bill is not law yet. The FAIR Act still has a tough road through the Senate to go. Similar bills have been proposed before but have not gotten this far so the team here at Forester Haynie is hopeful.

If you think you have a possible employment claim or an issue with an arbitration agreement contact us here or give us a call at 214-210-2100.

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