Forcing Arbitration: What Is “Arbitrability” And Who Decides?

Under the modern interpretation of the Federal Arbitration Act (FAA), companies routinely use forced arbitration clauses to hide employees’ claims of discrimination, retaliation, wage theft, and other workplace violations from public view. In forced arbitration proceedings, claims of employer wrongdoing may be decided in closed-door proceedings by company-paid arbitrators using rules promulgated by the employer. Increasingly, employees who object to this rigged system find their employers have included a “delegation provision” in their forced arbitration clauses, consigning those complaints to arbitration as well.

What Is Arbitrability

Having the power to hide most employment disputes in arbitration is a relatively recent jurisprudential win for employers. Historically, the U.S. Supreme Court  rejected the idea that most complex claims, like employment disputes (which often raise interwoven issues of contract and public policy), even were “arbitrable,” or that they could be fairly decided in a private arbitral forum. In assessing the “arbitrability” of a claim, courts considered whether it was proper for a dispute to be heard by an arbitrator who was empowered to enforce the contract between the parties but lacked the power to enforce the law. Courts would assess the arbitrator’s ability, under the terms of the agreement, to render a full and fair hearing in the matters before them.  They could also consider the impact forcing arbitration might have on public policy, such as whether it would be appropriate to enforce an arbitration clause in a contract of adhesion disseminated by a party with substantially more bargaining power.

In determining whether a claim is “arbitrable” today, the Court limits its scrutiny to whether parties “agreed to arbitrate,” and it sees no problem with finding such an agreement is present, even in preprinted contracts of adhesion presented to vulnerable employees and consumers on a take-it-or-leave-it basis.

Additionally, within the last decade, the U.S. Supreme Court has substantially weakened the plaintiff’s ability to fight the enforcement of ill-gotten arbitration provisions by sanctioning the use of “delegation provisions”. These clauses, which are usually found within the arbitration provision itself, typically provide that any dispute as to the arbitrability of a complaint should be decided by an arbitrator, not a court. Delegation provisions have not only disempowered courts from ruling on the question of arbitrability, they have increasingly empowered for-profit arbitrators to decide whether they, themselves, have the power to hear and rule on a person’s claims.

Starting in 1953, this timeline carries readers to present-day, reviewing along the way the question of what arbitrability is, who decides whether a matter is arbitrable, and how the U.S. Supreme Court’s view on this issue has evolved over time. Click on any moment in the timeline to read the case history.

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