Arthur R. Lehman, L.L.C.

Employees push back against mandatory arbitration clauses

Many contracts in the modern business world contain clauses requiring that disputes about the contract must be submitted to binding arbitration. When the parties to the arbitration proceeding are both large, well-funded corporations, the arrangement is usually deemed to be fair to both parties. When, however, the clause appears in an employment contract, the parties may be manifestly unequal, a large corporation versus one or more employees. Recently, lawyers who engage in employee representation have begun to push back against such provisions.

These cases were shoved into the public spotlight when Gretchen Carlson, a TV news anchor for Fox News, sued Roger Ailes, the company's president at the time, in New Jersey state court, alleging sexual harassment. Ailes removed the case to federal court in New York and filed a motion seeking binding arbitration of all issues in the case. The parties settled the case before the judge ruled on the motion.

Shortly thereafter, another Fox News anchor, Andrea Tantaros brought a similar lawsuit against several defendants, Ailes, and the corporation. Again, the defendants brought a motion to compel submission of the dispute to arbitration. The judge ruled from the bench at the close of oral arguments on the motion, holding that the arbitration clause was enforceable.

The Federal Arbitration Act was cited in both cases as requiring enforcement of the arbitration provision. Both appellate courts and the United States Supreme Court have held that the FAA must be accorded broad scope and that arbitration clauses in employment contracts are enforceable. Many commenters on employment law, however, have criticized this point of view because it gives too much power to employers. Two members of the Democratic minority in the Senate have introduced legislation to remove questions of state and federal law from the effects of the FAA. At the moment, the employers' views are ascendant, but continuing pressure from employee groups may alter the balance in a few years.

Source: New York Law Journal, "Employment Disputes: Fox News and the Effort to Upend Mandatory Arbitration," Paul F. Millus, June 19, 2017

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