By

Austin Robinson

In 2001, the Supreme Court ruled that employment-related disputes between employers and employees, except for transportation workers, are enforceable under the Federal Arbitration Act (FAA).¹ The FAA has since enabled an employer to use arbitration as a way to control the law governing their employment agreements, the dispute resolution procedure, and the publicity surrounding employee-related disputes.² Despite the imbalance of power in an employment relationship, the history and purposes of arbitration suggest that all employees, regardless of industry or job description, should be subject to arbitration.

The Supreme Court is currently ruling on “whether, to be exempt from the Federal Arbitration Act (FAA), workers that are actively engaged in interstate transportation must also be employed by a company in the transportation industry.”³ Bissonnette v. LePage Bakeries Park St. is the latest in a long string of cases stemming from Section 1 of the FAA,⁴ which created an exemption for “contracts of employment of seamen, railroad employees, or any other class of workers engaged in foreign or interstate commerce.”⁵ The arguments being heard by the justices concern whether the section should be interpreted as industry-specific or worker-specific, but neither is justified when looking to the principles and purposes of arbitration.⁶

The Supreme Court has historically favored a broad application of the FAA in arbitrating employment-related disputes.⁷ The FAA was primarily created to make arbitration agreements enforceable in federal court and to provide procedures that would make the process simpler, faster, and cheaper.⁸ The carveout for transportation workers stemmed from Congress’ concern over the necessary role of transportation workers in the “free flow of goods,” and likely exempted such workers to reserve the opportunity to develop more specific legislation for those working in transportation.⁹

However, Congress never created this legislation and, over the past twenty years, since Circuit City, the transportation industry has changed. Technology and the expansion of the internet has broadened the scope of employees that play an essential role in the transportation of goods. Also, the Supreme Court has continued to increase the scope of the FAA when it comes to employment-related disputes.¹⁰ This is evidenced by a series of decisions in which the Supreme Court held that class action waivers in mandatory arbitration agreements were broadly enforceable.¹¹ This means that businesses can now not only use mandatory arbitration agreements to bar individuals from litigation in court, but they can also shield themselves from class action claims.¹² The evolution of the transportation industry and the extensive reach of mandatory employment arbitration suggest that the Supreme Court should evaluate whether the exemption should exist at all, rather than its scope.

In addition to the historical development of the FAA’s application to employment arbitration, the underlying principles of arbitration favor a broad application. First, one key aspect of arbitration is party autonomy, that both parties willingly enter into and agree to the terms of the arbitration agreement.¹³ The typical argument against this is that employees lack a corporation’s resources, knowledge, and business experience. Further, in many instances, the employees may fail to read, understand, or ask for clarification regarding the terms of their contract.¹⁴ Despite this, the employee-employer relationship does not destroy the consent on which the agreement is built upon, which in this case is proven by the signing of the employment contract.¹⁵ Additionally, there is still an element of fairness being that both sides still have to agree to an arbitrator, and the lawyers who represent the parties will still investigate the reputation of each arbitrator and screen for any bias.¹⁶ Although an employee’s right to choose can be skewed by employers who require a specific arbitration forum or institution, the principles of contract law, which arbitration is built upon, lead us to enforce the arbitration agreement as is.¹⁷

Another pillar of arbitration, and purpose behind the FAA, is efficiency.¹⁸ Employment arbitration still would be faster than litigation, which can also minimize the costs the employee(s) incur.¹⁹ Employees should also appreciate that many arbitrations proceed to hearings where the employees can offer testimony, while only a small percentage of civil suits usually make it to trial.²⁰ Finally, confidentially is a key advantage of arbitration for employers.²¹ Confidentiality can be a large concern for employees because they believe it may prevent them from being able to prove and showcase the poor business practices of the employer that led to the dispute. Notwithstanding the concealment of the hearing, employees are able to disclose information related to their experience working for the company, only information about the arbitration proceeding is barred by the FAA.²² Also, the FAA cannot prevent an employee from filing a complaint with a governing agency, like the Equal Employment Opportunity Commission.²³

In conclusion, although employment arbitration is highly controversial, there are several justifications that suggest it should be applied uniformly. The history behind the FAA and the transportation workers exemption show that this separate classification of workers should be designated as obsolete. Also, the trend of the Supreme Court in expanding the applicability of the FAA in employment-disputes, indicates that arbitration should be applied to all classes of employees. This is reinforced by the purposes and mainstays of arbitration that can enable an employee to successfully arbitrate an employment-related dispute.