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A Possible Harbinger of Things to Come: DOD Appropriations Bill Restricts Use of Arbitration Agreements in Employment Contracts by Federal Contractors

As 2009 came to a close, Congress passed and President Obama signed into law the Fiscal Year 2010 Department of Defense Appropriations Act (the Act). The Act prohibits some Department of Defense (DOD) contractors from enforcing pre-dispute arbitration agreements that would force their employees to arbitrate claims under Title VII of the Civil Rights Act of 1964 (Title VII) or common law torts relating to sexual assault or harassment in arbitration, rather than bringing them in court. Affected contractors also must certify that subcontractors working with them on these contracts agree to the same prohibitions. This new limitation on the enforcement of arbitration agreements may be a harbinger of things to come, as both the House and Senate are considering legislation that would more broadly prohibit mandatory arbitration of employment law claims, as well as consumer claims.

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