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Total Articles: 34

A (Temporary) Reprieve for Mandatory Workplace Arbitration

On December 30, 2019, a federal judge in the Eastern District of California entered an order temporarily halting the enforcement of AB 51, California’s new anti-mandatory arbitration law. AB 51, which was set to go into effect on January 1, 2020, makes it illegal for an employer to require an employee or applicant to waive the right to pursue a civil action as a condition of employment. While AB 51 does not directly reference arbitration, the clear purpose of the law is to halt the use of mandatory workplace arbitration agreements in California.

Third Circuit Rules That FAAAA Does Not Preempt New Jersey’s ABC Test for Determining Independent Contractor Status

On January 29, 2019, the Third Circuit Court of Appeals concluded that the Federal Aviation Administration Authorization Act of 1994 (FAAAA) does not preempt New Jersey’s ABC test for determining whether a worker is an independent contractor or employee. The case is Bedoya v. American Eagle Express Inc.

Keep on Trucking: SCOTUS Decision Impacts Transportation Industry

On January 15, 2018, the Supreme Court issued a unanimous 8-0 decision in the matter of New Prime, Inc. v. Oliveira. Justice Kavanaugh took no part in the consideration or decision of the case. While this decision specifically applies to the trucking industry, it may also affect any employer engaged in interstate or foreign commerce that relies on independent contractors, and will provide guidance to lower courts in cases involving enforcement of arbitration agreements with those workers.

U.S. Supreme Court Provides More Guidance on Arbitration Agreements

In the last two weeks, the nation’s high court issued two opinions concerning an important issue relating to enforceability of arbitration agreements, namely, who decides the “gateway” issue of whether or not a particular dispute is arbitrable—a court or an arbitrator? According to the Court, if the arbitration agreement contains a provision expressly delegating issues of arbitrability to the arbitrator (rather than a court), that provision governs, and a court does not have authority to decide the issue. There is a limited exception to this principle, however. If the dispute involves transportation workers who are involved in interstate commerce, the issue of arbitrability must be decided by a court because the Federal Arbitration Act (“FAA”) expressly states that it does not apply to contracts of employment for such workers. Thus, even if an arbitration agreement with an interstate transportation worker includes a clause delegating arbitrability issues to an arbitrator, a court still must decide the issue of arbitrability in that limited context. The two Supreme Court decisions setting forth these holdings are discussed in this blog post.

Supreme Court: Interstate Transport Companies’ Independent Contractor-Drivers are Exempt from FAA

In New Prime, Inc. v. Oliveira, the U.S. Supreme Court held that the Federal Arbitration Act’s (FAA) Section 1 exemption applies to transportation workers, regardless of whether they are classified as independent contractors or employees. No. 17-340 (Jan. 15, 2019).

End of the Road: SCOTUS Ruling Means Many Transportation Workers Are Now Exempt From Arbitration

In a unanimous 8-0 decision, the Supreme Court ruled today that federal courts can’t force interstate transportation workers—including contractors—into arbitration, ruling that the Federal Arbitration Act’s Section 1 exemption for these workers is a threshold question for the court to resolve, not the arbitrator. Perhaps more importantly, the Court also applied the Section 1 “contract of employment” exemption from the FAA to include not only interstate transportation workers with employment agreements, but also to those interstate transportation workers with independent contractor agreements (New Prime Inc. v. Oliveira).

Supreme Court Rules Independent Contractor Truck Driver Not Required to Arbitrate Wage Claim

Executive Summary: In New Prime Inc. v. Oliveira, the U.S. Supreme Court held today that the Federal Arbitration Act’s (FAA) exclusion of certain “contracts of employment” from the Act’s coverage applies to transportation worker independent contractors. In its holding, the Court did not define who constitutes a transportation worker under the FAA.

End of the Road: SCOTUS Ruling Means Many Transportation Workers Are Now Exempt From Arbitration

In a unanimous 8-0 decision, the Supreme Court ruled today that federal courts can’t force interstate transportation workers—including contractors—into arbitration, ruling that the Federal Arbitration Act’s Section 1 exemption for these workers is a threshold question for the court to resolve, not the arbitrator. Perhaps more importantly, the Court also applied the Section 1 “contract of employment” exemption from the FAA to include not only interstate transportation workers with employment agreements, but also to those interstate transportation workers with independent contractor agreements (New Prime Inc. v. Oliveira).

Supreme Court of the United States Upholds Bar to Arbitration for Interstate Driver

On January 15, 2019, the Supreme Court of the United States held that the Federal Arbitration Act (FAA) did not apply to wage claims brought by an interstate truck driver, even though the plaintiff was classified as an independent contractor.

Supreme Court Eliminates the "Wholly Groundless" Exception to Arbitration Agreements, Reinforcing the Force of Delegation Provisions

On January 8, 2019, in a unanimous opinion written by Associate Justice Brett Kavanaugh, the Supreme Court ruled that where parties have agreed to delegate issues of arbitrability to an arbitrator, a court may not override that agreement. The Court explained this is true even where the court believes that a party’s argument that the dispute is within the scope of the agreement is frivolous. The Court’s decision ends a circuit split about whether, when faced with an enforceable delegation provision, courts could still hear arguments about the scope of an arbitration agreement under the “wholly groundless” exception.

Binding Nonsignatories to Arbitration Agreements

Addressing a motion to compel arbitration and to dismiss a pending action, the United States District Court for South Carolina analyzed the enforceability of an arbitration clause in favor of a nonsignatory. Supporting its opinion with a legion of authority, the court found in favor of arbitration based largely upon the specific language of the arbitration agreement but also based upon the overall federal policy supporting arbitration. Devon Smith, individually and on behalf of all others similarly situated v. General Information Solutions, LLC, WL 2018 6528155 (December 11, 2018).

Legislators respond to recent sexual harassment scandals by introducing bills to ban arbitration in sex bias cases

Many employers rely on pre-dispute arbitration agreements, usually entered at the beginning of employment, to resolve disputes that may arise during employment. The objective is to address matters through binding and private arbitration rather than public litigation. Now a bipartisan coalition in Congress, including Sen. Lindsay Graham, R-S.C., and Rep. Walter Jones, R-N.C., is trying to make arbitration agreements unenforceable in any “sex discrimination dispute.”

Could Congress Ban Arbitration Of Sex Discrimination And Harassment Claims?

A bipartisan group of federal legislators has turned their attention to the sweeping revelations of sexual harassment in the American workplace by introducing a bill that would prevent employers from forcing claims of sex discrimination or harassment into arbitration. If passed and signed into law, this legislation could have a profound impact on employment policies and practices, not to mention litigation that results from workplace conflicts. What do employers need to know about the Ending Forced Arbitration of Sexual Harassment Act?

Long-Term Care Facilities: Recent Developments on Use of Arbitration Agreements

Three cases making their way through the courts demonstrate that the question of arbitration clauses in long-term care (LTC) facility admission agreements is an active and developing area of the law.

Deflategate for Labor Lawyers Revisited: 2nd Circuit Reinstates Brady Suspension and Reaffirms Judicial Deference to Arbitration

The United States Court of Appeals for the Second Circuit has reinstated the four game suspension imposed by the NFL on New England Patriots quarterback Tom Brady for his role in the infamous “Deflategate” scandal. This decision overturned a district court decision which vacated an arbitration award issued by NFL Commissioner Roger Goodell enforcing the suspension.

Arbitration Plan Contained in Employee Handbook Enforceable? Not Without Savings Clause, Fifth Circuit Says

In Nelson v. Watch House International, L.L.C., (No. 15-10531), the Fifth Circuit Court of Appeals reversed a district court decision dismissing an employee’s lawsuit against his employer and compelling arbitration. The Fifth Circuit held that the employer’s arbitration agreement, contained within its employee handbook, failed to include a Halliburton-type savings clause that required advance notice before termination of an arbitration agreement became effective—and thus the agreement was illusory and unenforceable.

Mandatory Arbitration and the Supreme Court - The First of Potentially Many New Days

As Justice Scalia''s body lies in state in the Great Hall of the Supreme Court this morning, my eye was caught by the first headline in today's Employment Law 360.

Pitfalls of Arbitration Clauses in Employee Handbooks

An employee handbook is a necessary and familiar workplace fixture. A recent trend among employers is the inclusion of a mandatory arbitration clause, to avoid a jury trial in the event of employment-related litigation. Both state and federal courts have recently grappled with the validity of arbitration clauses in the employment litigation realm, and have both concluded that such clauses are not enforceable. These cases serve as a reminder that an employer must be vigilant should it wish to make such a clause part of its employment policies.

Is binding arbitration an effective alternative to litigation for employment disputes? One PA federal court thinks it’s not.

In a case that could act as a jumping off point for discussion regarding the pros and cons of mandatory arbitration in employment cases, the U.S. District Court for the Eastern District of Pennsylvania ultimately upheld an arbitrator’s decision that a soccer coach’s firing did not violate his employment agreement. Nowak v. Penna. Professional Soccer, et al., EDPA, No. 12-416 (January 11, 2016). In its published opinion, the court provided its own view of binding arbitration as a problem resolution mechanism – and the language is not supportive of that form of ADR.

State Limitations on Arbitration Agreements with Class Action Waivers Again before U.S. Supreme Court

The latest of a line of recent cases in which the U.S. Supreme Court has weighed the enforceability of class action waivers in arbitration agreements was before the Court on October 6, 2015, when the Supreme Court heard oral argument in DirecTV, Inc. v. Imburgia, et al., No. 14-462. These decisions almost uniformly have favored arbitration, and many employers have adopted and successfully utilized arbitration agreements containing class action waivers.

PAGA Representative Claims Remain Alive After SCOTUS Denies Iskanian Review

This morning, the Supreme Court of the United States declined review of a state supreme court case that has sparked widespread flux in the landscape of class action arbitration waivers in California. In Iskanian v. CLS Transportation Los Angeles, LLC, S204032 (June 23, 2014), the Supreme Court of California had ruled on the issue of whether the Federal Arbitration Act (FAA) preempts California’s policy against enforcement of class action waivers on the grounds that such waivers were contrary to public policy or unconscionable. Last summer, the state’s highest court held that the California policy was preempted by the FAA. But the California Supreme Court refused to find that the FAA preempted rephresentative action waivers as applicable to the Labor Code Private Attorneys General Act of 2004 (PAGA). As a result, under the California Supreme Court’s decision, while arbitration agreements can prohibit employees from bringing class actions, employees can still bring representative actions pursuant to PAGA and an arbitration agreement containing a waiver of PAGA representative actions is not enforceable. The United States Supreme Court’s decision means that the California Supreme Court’s decision is still good law.

IADC ADR Committee Chair Val Stieglitz of Nexsen Pruet reports on recent trends regarding state statutes restricting out of state arbitrations

Congress passed the Federal Arbitration Act (FAA) in 1925 to place arbitration agreements on the same footing as other contracts.1 Under the FAA, an arbitration provision “shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract.” 9 U.S.C.A. § 2. This simple idea has, of course, spawned considerable controversy and litigation, and the tension between the FAA and State laws continues to appear on many fronts.

U.S. Supreme Court Enforces Arbitration Clause in Non-Compete Agreement

In the latest of a long line of decisions favoring arbitration, the United States Supreme Court has overturned a decision of the Oklahoma Supreme Court invalidating a non-compete agreement that contained a binding arbitration clause. The United States Supreme Court reasoned that by declaring the non-competition agreements null and void, rather than leaving that decision to a private arbitrator in the first instance, the Oklahoma Court ignored the basic tenets of the Federal Arbitration Act (FAA) that expresses a national policy favoring arbitration.

An Arbitration Sign of the Times

If you think arbitration is not a significant player in employment law dispute resolution, you would have to think twice when you see that the National Institute for Triall Advocacy (NITA), one of the best known training programs for trial lawyers is holding their first Arbitration Advocacy May 18-20, 2012.

Arbitration (Is Not the Same as) Courts of Conciliation

In my first year of law school at the University of Texas, we had a class called "Introduction to the Study of Law." My section was taught by Professor Leon Lebowitz, one of the nicest profs at the law school, and a really good Business Associations, Securities Regs professor. Intro, at least I remember it, was known best for its endless discussions about the "forms of actions" which of course were purely historical relics even at the time. (For some reason trespass de bona asportatis sticks in my mind, how scary is that?)

Two And A Half Lawsuits: Lessons Learned From The Charlie Sheen Litigation

The recent termination of Charlie Sheen from "Two and a Half Men," and the swirl of negative publicity around the incident, has shed light on the use of arbitration agreements. After he was fired, Sheen filed a $100 million lawsuit against Warner Bros. He wants the proceedings held in front of a jury rather than being privately adjudicated by an arbitrator as outlined in his Warner Bros. contract.

Legislative Override of Supreme Court

What a difference three years makes. Unlike the opening weeks of the prior Congress when it could not act fast enough to get the reversal of the Supreme Court's decision in the Lilly Ledbetter case to President Obama's desk, the offering of the Arbitration Fairness Act by Senator Franken, faces much more difficult sledding. Franken bill would block mandatory arbitration clauses in cell phone contracts.

Arbitration Can Save Time and Money

s American businesses slowly emerge from the worst downturn since the Great Depression, employers should steer clear of roadblocks that can undermine their progress.

The Potential Impact of Today's Supreme Court's 5-4 Decision on Arbitrability.

It is never too much a surprise when the Supreme Court reverses the 9th Circuit, nor in recent years is it a surprise when the Court hands down a decision favoring arbitration of disputes, even in employment law matters. In a narrow sense, that is the substance of today's 5-4 decision in Rent-A-Center, West, Inc. v. Jackson, (S.Ct. 6/21/10) [pdf].

Employers Handed Narrow Arbitration Decision Victory.

In a narrow 5-4 decision, the Supreme Court handed employers yet another victory in the area of employment arbitration agreements today by holding that, in many circumstances, the issue of whether the agreement is enforceable should be made by an arbitrator and not a court of law.

Arbitration Restricted For Defense Contractors And Subcontractors.

On December 19, 2009, President Obama signed into law a new Defense Appropriations Act. The Act contains a provision, originally introduced by Senators Al Franken of Minnesota and Mary Landrieu of Louisiana, with important implications for federal defense contractors and subcontractors that have implemented arbitration agreements for their employees. Specifically, the Act prohibits the federal government from awarding funds appropriated by the Act for any federal contract in excess of $1,000,000 if a contractor requires its employees or the employees of an independent contractor to arbitrate certain claims.

Is It Time For You To Adopt An Arbitration Policy?

When you fire an employee, there is always the concern that your termination decision will end up under the microscope of litigation – the human resources equivalent of Monday-morning quarterbacking. But instead of having that employment dispute resolved in a courtroom, you may want to consider adopting an arbitration policy that substitutes an arbitration hearing for a courtroom trial.

Mandatory Arbitration of Employment Disputes: Is It Right For Your Company? (pdf).

On March 25, 2008, the U.S. Supreme Court ruled in Hall Street Assocs. LLC v. Mattel, Inc. that courts “must” confirm an arbitration award unless that award is vacated, modified, or corrected on the basis of some very narrow and exclusive categories. The Court further held that the parties to an arbitration agreement could not contractually agree to modify a reviewing court’s authority to vacate or modify the arbitration award. While this case emphasized the limited grounds for reversal and review under the Federal Arbitration Act (FAA), it also underscored the potential advantages of arbitration of disputes – in contrast to civil litigation – for employers.

Arbitration Agreements: Make Sure Your Employees Actually Sign Them.

Many employers utilize binding arbitration to resolve employment-related disputes with their employees. The advantages of binding arbitration include savings of time and cost, limited discovery, a more expedited process than court procedures, and, hopefully, smaller attorney's fees.
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