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Perspective: Up-to-date information on changes in federal arbitration

Recently, many proceedings, including arbitration, have been filed in courts and legislatures nationwide. There were two important developments from Congress and the Supreme Court. Legally, Congress amends the Federal Arbitration Act (FAA) to invalidate and unenforce pre-dispute arbitration agreements related to allegations of sexual assault or sexual harassment, and make such allegations on a class or group basis. Banned the waiver of the right to do. .. Directly across from First Street in Washington, DC, the Supreme Court has ruled that the party’s right to file a proceeding to arbitration after the first proceeding has not depended on whether the delay harmed the other party. ..

The law ends arbitration of sexual harassment claims

The FAA typically allows employers to enforce pre-dispute compulsory arbitration agreements with employees and prohibits claimants from submitting claims publicly to federal and state courts. The “End of Forced Arbitration of Sexual Assault and Sexual Harassment Act”, passed by Parliament and signed by the President, has recently become a law and amended the FAA. Beginning March 3, 2022, such claims arising out of or after that date do not need to be subject to pre-dispute arbitration. These claims may also be raised as joint, collective, or collective action in the presence of workplace sexual harassment or sexual assault disputes.

These restrictions appear to apply to all existing arbitration agreements, including those signed prior to the enactment of the law. As a result, the law concludes the current pre-conflict agreement that forces employees to arbitrate cases related to sexual harassment or sexual assault disputes, except for disputes that have already occurred or occurred prior to the enactment of the new federal law. It can be effectively disabled. There is no longer any presumption that the arbitration agreement controls allegations of sexual harassment or sexual assault and forces employees or other alleged victims to pursue these allegations in the arbitration forum rather than in court. However, in particular, the law contains an exception that the allegations may continue to be subject to arbitration, which means that employees arbitrate certain cases after the alleged acts have occurred. Only if you choose to do so. In addition, the law only prohibits the enforcement of pre-dispute arbitration.

Employers who have adopted an arbitration agreement and / or a class action or class action exemption must renew their existing arbitration agreement and exemption to take this new law into account. In addition, many states have begun legislation in this area, including further banning claims from arbitration as well as federal law claims. Employers need to be aware of the impact of state law in the state in which they are located.

Waiver of arbitration rights does not need to show prejudice

The Supreme Court recently ruled that the FAA did not allow federal courts to develop arbitration-specific procedural rules. In doing so, the Supreme Court denied the prejudice requirement applied by multiple federal circuit courts. The Supreme Court has ruled that the party’s right to file a proceeding to arbitration does not depend on whether the delay has harmed the other party.

The appeal decision required the Supreme Court to consider the decision of the 8th Circuit Court of Appeals. The dispute arose from wage and hour bills claimed by employees to limit their salaries to 80 hours per two weeks, regardless of working hours. The employee has filed a proceeding in federal court. The employer filed a proceeding, but subsequently enforced arbitration. The employee claimed that the employer had waived the right to arbitration. Circuit 8 determined that the employee was unable to show that her employer was prejudiced against her by taking inconsistent behavior in invoking an arbitration agreement with her. ..

In overturning the decision of the Eighth Circuit, the Supreme Court ruled that the FAA’s “policy to support arbitration” does not allow federal courts to add arbitration-specific waiver rules such as prejudice requirements. Did. Therefore, when determining whether a party has waived the right to arbitration, the court will consider the actions of the party and whether the party deliberately waived the right to arbitration by acting in contradiction to that right. is needed.

From now on, the general prejudice claim will no longer be the standard for the court to consider when determining whether a party has waived the right to arbitration. It is important that the employer recognizes the right to arbitrate, where applicable, and responds to that right in a timely and appropriate manner. By lowering the standard to show that the employer has abandoned its ability to enforce arbitration, this decision makes it easier for some employees to exclude class proceedings in court from individual proceedings. There is a possibility of becoming.

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As these recent actions show, changes are underway in the field of arbitration. Employers who use the arbitration clause with employees, etc., should always be informed about these changes, as they will have a significant impact on the arbitration ability and the arbitration of claims filed by the employee. We recommend that you consult an experienced lawyer to ensure that you are aware of all applicable federal and state laws and that the arbitration clause complies with those laws.

R. Eddie Wayland is a partner in King & Ballow’s law firm. You can contact Mr. Wayland at (615) 726-5430 or rew@kingballow.com. The above materials, discussions, and comments have been omitted from law, court decisions, and administrative decisions and should not be construed as legal advice on a particular situation or subject matter.

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https://www.freightwaves.com/news/viewpoint-an-update-federal-arbitration-changes Perspective: Up-to-date information on changes in federal arbitration

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