Posted 5 months ago - by

House Passes Forced Arbitration Injustice Repeal (FAIR) Act

The U.S. House of Representatives approved the Forced Arbitration Injustice Repeal (FAIR) Act on March 17th. This bill prohibits employers from enforcing arbitration agreements on employees before any disputes even arise.

The bill comes shortly after a new law that bans these kinds of agreements for sexual harassment claims was signed into effect in early 2022. The difference between the two is that the FAIR Act bill includes essentially all employment disputes beyond sexual harassment claims. Moreover, it includes disputes between contractors and companies that hired them.

FAIR Act

If passed by the Senate, this legislation is designed to ban employers and workers from making an agreement in advance to have legal claims go through a neutral third party, or arbitrator, rather than through the court.

Additionally, the FAIR Act would invalidate pre-dispute arbitration agreements and joint-action waivers for employment, consumer, civil rights, and antitrust disputes. The bill’s ultimate goal is to give the option of and therefore access to the court system should a dispute arise. Supporters of the bill argue that it is no different than the new law pushing the same for sexual harassment claims other than broadening the list of claim types.

More importantly, the bill does not ban all arbitration pacts. It only bans mandatory pre-dispute agreements. Workers can still choose arbitration for their claims allowing them more control over the way in which they handle their dispute.

Employers

If the bill passes into law, it will be effective immediately. It will then apply to any dispute or claim that arises or occurs on or after the effective date. Notably, it will not apply to arbitration provisions in collective bargaining agreements between labor unions and employers.

Moreover, the Senate declined to pass this bill back in 2019 so the future of this bill remains unclear.

Is there anything Payroll Systems can help you with as you accommodate rapid legislation changes? Reach out and talk to us about the easy-to-scale solutions you need for your business.

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This article provides general information and shouldn’t be construed as legal or HR advice. Since employment laws may change over time and can vary by location and industry, please consult a lawyer or HR expert for advice specific to your business. You can also contact Payroll Systems to inquire about our HR support services.