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U.S. Supreme Court to Decide On Legality of Arbitration Clauses in Business and Employment Contracts


On January 13th, the U.S. Supreme Court agreed to hear a case that could have national, broad implications for all employers and businesses, especially those who utilize employment contracts to mandate that any disputes be raised via arbitration rather than in court, and on a one-by-one basis (i.e. the opposite of class action). The decision will also affect countless other businesses, as not only are arbitration clauses present in many employment contracts, but also in many service- and various consumer-based contracts, such as those for nursing homes, cell phones, credit cards, and others.

Some experts predict that the Court will uphold the ability for private companies to establish this kind of requirement in employment contracts, not only because that is in accordance with the general freedom to contract, but also because the Court already ruled (in 2011) that the Federal Arbitration Act favors arbitration and allows companies to set these types of limits (see AT&T Mobility v. Concepcion).

It is expected that the court will hear these arguments sometime in April.

The Connection to Class Waivers

Also at issue in the case is whether the National Labor Relations Act, in prohibiting class waivers, essentially protects workers’ rights to class action lawsuits because it technically protects ‘engaging in concerted activities.’ The answer will ultimately have a strong effect on both employers and employees throughout the nation, as arbitration agreements have become so widespread and the current legal patchwork leaves many confused.

The Law on Arbitration

The Federal Arbitration Act makes arbitration agreements valid, irrevocable, and enforceable. Courts have historically placed arbitration agreements on an equal footing with other contracts because it is a fundamental principle that arbitration is a matter of contract. As a federal law, it also preempts any state laws which declare these types of provisions to be unconscionable.

In 2013, Florida joined 17 other states and the District of Columbia in adopting the Revised Uniform Arbitration Act, ultimately leading to the creation of the Revised Florida Arbitration Code. The revisions addressed who decides the arbitrability of a dispute, the availability of provisional remedies before and during, the court’s’ power to enforce rulings by the arbitrator, the arbitrator’s immunity, and various other procedural matters of arbitration.

Attorneys Working To Protect Corporate Employers and Businesses

As a business owner, any and all issues pertaining to employees and other associates require careful handling and a strong level of both experience and skill.

At HD Law Partners, our Tampa business law lawyers possess the knowledge and experience necessary to help prevent potential problems before they occur, while addressing any current difficulties you may be facing. With over 40 years’ combined experience in representing clients in a variety of types and sizes of businesses, we are strong legal advocates, working aggressively to ensure that your company’s best interests are protected. Contact us today for any legal matters related to commercial litigation, business, defense of judgments (in consumer protection), and corporate law.


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