Reuters Legal News

The past decade has seen a variety of hot topics emerge in the labor and employment law field. This includes independent contractor classification, state and local paid sick leave and similar laws, and the expansion of anti-discrimination laws. Undoubtedly, however, the issue of mandatory workplace arbitration agreements is at or near the top of the list.

In that vein, many employers require their employees to agree to arbitrate employment-related legal claims rather than pursue them in court. This is for a host of reasons, including that arbitration can be, and often is, mutually beneficial, allowing parties to resolve claims efficiently and privately. However, in response to vocal public criticism of arbitration agreements, a growing number of federal and state legislators are working to curb their use, particularly in the context of sexual misconduct.

This article will discuss the federal and state legal landscapes with respect to the use of arbitration agreements in the workplace, and where we may be headed in the future on that front.

Current federal landscape

Employment-related arbitration agreements have, under the Federal Arbitration Act (FAA), long been considered generally enforceable. Adopted in 1925, the FAA directs courts to enforce arbitration agreements according to their terms. (9 U.S.C. § 2, 4). The U.S. Supreme Court has repeatedly ruled that the FAA establishes “a liberal policy favoring arbitration agreements.” (Moses H. Cone Mem’l Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 24 (1983)).

In 2001, therefore, the Supreme Court confirmed that agreements to arbitrate employment-related disputes between employers and employees are generally enforceable under the FAA. (Circuit City Stores v. Adams, 523 U.S. 105 (2001)). More recently, the Court held that employment agreements requiring individual rather than collective arbitration are enforceable and do not run afoul of employees’ right to engage in protected concerted activity under the National Labor Relations Act (NLRA). (Epic Sys. Corp. v. Lewis, 138 S. Ct. 1612 (2018)).