The Forced Arbitration Injustice Repeal Act (FAIR Act) to Re-Open Courthouse Doors

Visitors of this website are likely familiar with the power and pervasiveness of forced arbitration clauses. Employers and businesses routinely put clauses into the fine-print of boilerplate contracts that deprive consumers and employees of their right to go to court and instead force their claims to be decided in a secret arbitration proceeding. Often class actions are banned, so people who are injured by the same actions cannot sue together to have strength in numbers. Even worse, these “agreements” are entered into before any conflict arises, meaning that employees and consumers are losing their rights to go to court before they even know what wrongs for which they might need to seek relief in court. One recent example that demonstrates why these clauses are so favorable to bosses and corporations are those individuals who have faced sexual harassment at work. Inspired by the #MeToo movement, many have stepped forward to hold their perpetrators accountable, only to find that they have to have their claims decided in secret by an arbitrator rather than get their day in court with a judge and a jury.

This practice has been extremely unfriendly to consumers and employees, among others. Yet for the last 30 years, the U.S. Supreme Court has generally upheld these kinds of arbitration clauses and shut the courthouse doors to many who need access to justice in the courts. The extent of the damage is shielded because disputes in court are generally transparent and available to the public while those in arbitration generally are not.

For more than a decade we have been discussing this practice. In 2019, consumer, employee, and antitrust advocates scored a big win in the U.S. House of Representatives. The House passed the Forced Arbitration Injustice Repeal Act, known as the FAIR Act. If signed into law, the bill would invalidate any pre-dispute arbitration clause that arises in “an employment dispute, consumer dispute, antitrust dispute, or civil rights dispute,” even if that clause predated the law. The effect would prevent a company or employer from relying on the fine print in buried contract terms (often years old) that would have forced someone invoking a claim to secret arbitration rather than allowing them to choose to go to court or to arbitration. For many, the courthouse doors would be open again. The FAIR Act would even the playing field for people trying to enforce their basic rights against larger, powerful institutions that use buried fine print contract terms to restrict—in advance—the options of those who are injured and suffer harm at the hands of those same institutional actors.

The bill has stalled in the Senate, with no action taken yet as of this posting. You can call your senators and tell them what you think.