Forced Arbitration Injustice Repeal Act (“FAIR Act”)

May 17, 2022

By: Adrian P. Castro

You may recall that, on February 16, 2022, my partner, Adrian Castro, wrote about a new federal law which prohibits mandatory pre-dispute arbitration agreements in workplace sexual harassment and sexual assault cases, as well as joint action waivers in such cases. Adrian now tells us about a proposed federal law which would invalidate arbitration agreements and joint action waivers in a much broader class of cases including most employment discrimination, harassment, retaliation, and wage claim cases. 

Forced Arbitration Injustice Repeal Act (“FAIR Act”)
The Forced Arbitration Injustice Repeal Act (“FAIR Act”) is a proposed piece of legislation that would ban all pre-dispute arbitration provisions or agreements in the context of employment, consumer, antitrust, or civil rights disputes. The FAIR Act would also prohibit agreements or practices that would interfere with the rights of individuals, workers, and small businesses to participate in any joint, class, or collective action related to an employment, consumer, antitrust, or civil rights dispute. 

The FAIR ACT broadly defines what constitutes an employment, consumer, antitrust, or civil rights dispute:

  • An “antitrust dispute” is defined as any action arising from the alleged violation of federal or state antitrust laws. 
  • The term “civil rights dispute” is defined broadly by the FAIR Act to include disputes involving the alleged violation of the U.S. Constitution or a State constitution, or the alleged violation of any federal, state, or local law that “prohibits discrimination on the basis of race, sex, age, gender identity, sexual orientation, disability, religion, national origin or any other legally protected status in education, employment, credit, housing, public accommodations and facilities, voting, veterans or service members, health care, or a program funded or conducted by the Federal Government or a State government.”   
  • “Consumer dispute” is defined as a dispute involving “real or personal property, services (including services related to digital technology), securities or other investments, money, or credit for personal, family, or house hold purposes,” and is between an individual, a seller, or any third party involved in the transaction between the individual and the seller. 
  • “Employment dispute” is defined as disputes between an individual and a person “arising out of or related to the work relationship or prospective work relationship between them.” The definition includes disputes regarding term of payment, advertisement, recruitment, referrals, discipline or discharge in connection with a working relationship. Most, if not all, federal discrimination laws would fall within the definition of “employment dispute.”

Note all four definitions are also defined to include joint, collective, and class actions. The FAIR Act would not apply to arbitration provisions located in collective bargaining agreements. 

If enacted, the FAIR Act will ban any arbitration agreements or joint action waivers of the type described herein entered into on or after the FAIR Act’s enactment date. 

While versions of the FAIR Act have been circulating in the U.S. legislature for some time, the present version passed the U.S. House on March 17, 2022. While the act lacks bipartisan support, presently having no republican support in the Senate, President Biden has signaled his support in the event it were to pass the Senate. 

A copy of the present version of the act can be read here