June 18, 2021
Forty House Democrats sent a letter to the White House urging President Biden to prohibit federal contractors from using mandatory arbitration clauses in employment contracts.
“Forced arbitration clauses leave millions of private-sector, non-unionized workers without fair means to seek justice when they have been subjected to workplace discrimination, making all Americans less safe at work,” the letter states. It was written by Marie Newman (D-IL), Cheri Bustos (D-IL), Lucy McBath (D-GA), and Pramila Jayapal (D-WA), and signed by 36 other House Democrats.
Mandatory arbitration has been a target of Democratic legislators for much of the past decade. The FAIR Act (H.R. 963), which would prohibit private employers from using mandatory arbitration clauses in employment contracts, was introduced in the House in March. A previous version of the bill passed the House in the 116th Congress but saw no action in the Senate.
Targeting federal contractors through executive order would allow Democrats and the Biden Administration to bypass Congress, where the chances of a bill such as the FAIR Act of passing through both chambers are slim. President Obama used such a strategy in 2014 with Executive Order 13673, which banned pre-dispute arbitration for federal contractors, among other requirements such as disclosing previous labor violations.
The Association previously sent a letter to Congress urging Members not to pass the FAIR Act, and highlighting that federal law has protected arbitration for nearly 100 years as an effective means of resolving disputes between businesses, consumers, and employees. HR Policy Senior Labor and Employment Counsel Roger King testified earlier this year before Congress to similarly advocate for the continued use of fair alternative dispute resolution procedures.
Outlook: President Biden has already used executive orders—including raising the minimum hourly wage for federal contractors to $15—to implement his ambitious labor agenda in an attempt to run around Congress, where sweeping labor reform has remained elusive. It would be unsurprising, therefore, if President Biden granted the House Democrats’ request and issued an executive order banning the use of mandatory arbitration clauses by federal contractors. Employers with federal contracts should review their own alternative dispute resolution processes and remain on the lookout for action from the White House on this issue.