Alaska Employment Law

The Franken Amendment to the 2010 Defense Appropriations bill was recently signed into law.  Of significance for any defense contractors, and their employees, is that it would preclude use of arbitration clauses or provisions in employment agreements.

Donna Lenhoff, Legislative & Public Policy Director of the employees rights group, NELA, writes:

I wanted to be sure that everyone knows that the Franken Amendment has, indeed, become law; the President signed the Defense Appropriations bill, of which it is section 8116, on December 19. Importantly, it bars contractors and subcontractors that are funded by 2010 appropriations not only from entering into pre-dispute “agreements” with their employees that require arbitration of Title VII claims, but also from ENFORCING any such agreements that already exist. It also appears to apply to such “agreements” with ANY of the contractors’ employees, anywhere, not just those whose jobs are funded by defense appropriations. The language of the Amendment as adopted is reproduced in the attachment; a pdf version of the entire bill can be found at http://frwebgate.access.gpo.gov/cgi-bin/getdoc.cgi?dbname=111_cong_bills&docid=f:h3326enr.txt.pdf

The Franken Amendment is an offshoot of broader Congressional action.  Last year, Congress began consideration of the Arbitration Fairness Act of 2009, H.R. 1020, introduced on February 12, 2009.  If passed, the AFA would preclude any pre-dispute agreement to arbitrate employment, civil rights, or consumer disputes (except for such provisions in collective bargaining agreements).  The reasoning underlying the AFA is that employees and consumers often have no real understanding that they are waiving rights to file suit in court, arbitrators and private arbitration companies have institutional reasons to develop rules that favor employers and businesses, there is little effective judicial review of arbitration decisions because of the standard of review, the federal policy favoring arbitration should not subvert individuals’ constitutional rights. 

Whether one agrees or disagrees with the AFA’s rationale, there is no denying that it would dramatically change arbitration agreements used in Labor and Employment law.  It is also probably fair to state that the AFA will probably gain at least some traction in Congress given its current composition. How much traction it gains remains to be seen.