Proposed Federal Law Would Bar Certain Pre-Dispute Arbitration Agreements

Wednesday, July 1, 2009

Bills introduced in both the United States Senate and the House of Representatives would amend the Federal Arbitration Act.

07/01/2009 / /

Bills introduced in both the United States Senate and the House of Representatives would, if signed into law, amend the Federal Arbitration Act to prohibit mandatory pre-dispute arbitration agreements in the employment, consumer, franchise, and civil rights contexts. 

Proponents of these bills believe that the Federal Arbitration Act has been wrongly applied to disputes between parties of greatly disparate economic power.  As a result, employees and consumers must give up their rights to resolve disputes in court as a condition of getting a job, receiving medical care, or obtaining a credit card.  Further, bill proponents believe that mandatory arbitration both undermines the development of public law for civil and consumer rights and fails to adequately protect those rights.

Although differences exist between the two versions of the Arbitration Fairness Act of 2009 (“AFA”), if enacted, the AFA would render any pre-dispute arbitration agreement invalid and unenforceable if the agreement requires arbitration of a dispute: (1) between an employer and an employee; (2) between a consumer and a seller of property, services, money, or credit; (3) arising under a statute intended to protect civil rights; or (4) between a franchisor and a franchisee.  The AFA would not apply to arbitration agreements entered into by an employer and a labor organization or to arbitration agreements entered into before the law’s effective date.

If you would like to speak to an employment law attorney about the AFA, please contact the employment lawyers at Clouse Dunn Khoshbin LLP at


Release ID: 8726