In 1925, the U. S. Congress passed the Federal Arbitration Act (FAA) in order to expedite the resolution of commercial disputes between merchants of equal bargaining power. For more than 50 years, the FAA was enforced as intended. Then, beginning in the early 1980’s, the U.S. Supreme Court issued a series of rulings that fundamentally changed the nature of the FAA, giving rise to the use of forced arbitration in ways that were never intended, including consumer and employment contracts.
The Court’s rulings have allowed unscrupulous companies to drive violations of state and federal statutory law out of public view and behind the closed doors of secret arbitration, where disputes are decided by for-profit judges using rules written by and for the corporate employer. This abridged history provides readers with a broad overview of how U.S. Supreme Court jurisprudence has transformed the FAA from a banal commercial law to an all-powerful super-statute, such that today “arbitration is second only to God in its power and might in our civilization.” All internal quotes and citations have been omitted unless otherwise noted.
The Question Of Arbitrability: What Is It & Who Decides?
Retaining the right to go to court often turns on whether filed claims are “arbitrable” under the terms of the contract. Over time, the Court’s conception of arbitrability, as well as who may properly resolve the question, substantially expanded.
Forcing Employees To Arbitrate Workplace Disputes
The Court once rejected efforts to force employees into arbitration. In the 1990’s the Court reversed itself, and, today, over 60 million workers are required to surrender their right to go to court as a condition of employment.
Using Class Action Bans To Silo Workers & Bury Claims
Collective legal action is a vital tool for employees harmed by unlawful treatment at work. Recent decisions from the Court have undermined workers’ ability to band together and hold lawbreaking employers accountable.
FAA Preemption: Forcing Arbitration In The States
Many state judges and policymakers understand the danger posed to workers by forced arbitration. Unfortunately, the U.S. Supreme Court’s recent interpretation of the FAA, force state courts to order harmed citizens into secret arbitration, and states can do little to stop it.
Forcing Arbitration Of Federal Statutory Claims
Congress has passed countless federal laws to protect employees. But workers’ enjoyment of their rights depends on their ability to enforce those laws in public courts of law. Today, for-profit arbitrators have the power to rule on workers’ statutory rights—and in secret.
Defenses Using Contract Terms & The “Savings” Clause
Once a worker is bound by a forced arbitration clause, there is little they can do to escape. In recent years, the U.S. Supreme Court has rejected many of the defenses that workers used to rely on to protect themselves from being silenced in forced arbitration.
