Should employers abandon arbitration agreements altogether? Probably not yet

In March 2022, President Joe Biden signed the Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act (EFASASHA) into law (see “What new ban on forced arbitration in #MeToo cases means for MA employers” in our April issue). It banned arbitration agreements for employment-related sexual harassment and sexual assault cases only. Riding the momentum, the U.S. House of Representatives recently passed the Forced Arbitration Injustice Repeal (FAIR) Act of 2022, which seeks to extend the ban on arbitration agreements to all employment, consumer, antitrust, and civil disputes. To be clear, the FAIR Act isn’t yet law. It still must pass the Senate and be signed by President Biden. But if both things happen, the measure will ensure arbitration in employment lawsuits will become a rare occurrence and begs the question: Should employers toss out the agreements altogether? Probably not yet.

Just how far does FAIR Act go?

Mandatory arbitration provisions have been an increasing focus of the #MeToo movement in recent years, with activists maintaining they silence victims and prevent them from publicly airing their experiences. Before the EFASASHA, employers were permitted to mandate arbitration of virtually all types of claims filed by employees. Indeed, a few years ago, the U.S. Supreme Court confirmed employers’ and businesses’ rights to use mandatory arbitration agreements to resolve disputes.