House Passes Bill Prohibiting Most Predispute Arbitration Agreements

By Chatrane Birbal posted 03-18-2022 00:00


The U.S. House of Representatives passed a bill that would ban predispute arbitration agreements related to employment, consumer, antitrust, or civil rights matters, with few exceptions.

As previously reported, the Forced Arbitration Injustice Repeal Act (FAIR Act) (H.R. 963) contains a stipulation that parties could voluntarily agree to arbitration after a dispute arises. In addition, the legislation would exempt collective bargaining agreements between employers and labor organizations. The vote follows the recent passage of a bill(Opens in a new window) prohibiting predispute arbitration agreements in cases of workplace sexual assault or harassment. 

The White House strongly supports the bill, the Office of Management and Budget wrote in a March 15 statement of administration policy. The House approved the bill by a vote of 222 to 209, mainly along party lines.

HR Policy Association joined 121 other prominent business groups ahead of the House vote in a letter to Congress urging Members to vote against the FAIR Act. Our letter noted, “The only clear beneficiaries of broadly eliminating cost-effective and fair arbitration as a viable way to resolve disputes are class action lawyers, who would directly benefit from increased class action litigation.”

Outlook: The FAIR Act now heads to the Senate, where its prospects for passage are slim. To date, the Senate Judiciary Committee, which has jurisdiction over this issue, hasn’t acted on the companion legislation, S. 505. The Senate bill currently has 39 Democratic cosponsors and Senator Bernie Sanders (I-VT). In the meantime, the Association will continue to reach out to Senators and their respective staff to educate them about the use of arbitration agreements in employment settings and advocate against enactment of the FAIR Act into law.