SCR161

A Concurrent Resolution urging Congress to amend the Federal Arbitration Act to limit its application to transactions between commercial businesses.

Be It Resolved by the Senate of the State of New Jersey (the General Assembly concurring):

Whereas, The 1925 Federal Arbitration Act (9 U.S.C. s.1 et seq.)(“FAA”) was designed principally to permit businesses involved in international maritime trade and bona fide interstate commerce to enter into binding arbitration agreements to resolve disputes among them; and

Whereas, The FAA was originally intended to allow, on a voluntary negotiated basis, arbitration agreements between merchants of roughly equal bargaining power to arbitrate commercial disputes, and excluded from such agreements employment contracts of workers engaged in foreign or interstate commerce; and

Whereas, In recent decades, court decisions have interpreted the FAA in an increasingly expansive manner, allowing businesses to compel employees, consumers and others to accept binding arbitration agreements that override their rights to engage in civil actions, seek criminal penalties, or any other legal remedies, outside of the arbitration procedures selected by the businesses, in cases of violations by the businesses of a growing range of laws, including labor, civil rights and environmental laws; and

Whereas, Recent court decisions have ruled in favor of mandatory arbitration agreements which not only prevent worker and consumers from using the courts, but also bar class actions, even under the employer’s own arbitration procedures, putting individual workers and consumers at a great disadvantage when challenging large companies; and

Whereas, The exemption in the FAA of employment contracts of workers “engaged” in foreign or interstate commerce from FAA requirements has, in recent years, been narrowly interpreted as applying only to transportation workers, leaving most workers potentially subject to employer-selected mandatory arbitration under the act; and

Whereas, Under these broad new interpretations of the FAA, the percent of non-unionized companies which impose mandatory arbitration agreements on their employees grew from 2 percent in 1992 to 54 percent in 2017; and

Whereas, 56 percent of all private non-unionized employees are now subject to mandatory employment arbitration procedures, which means 60 million American workers have suffered reduced access to the courts to protect their legal rights under laws including Title VII of the Civil Rights Act, the Americans with Disabilities Act, the Family and Medical Leave Act, the Fair Labor Standards Act, and many state and local laws; and

Whereas, The current interpretation of the FAA has severely reduced the legal remedies of citizens across the nation, leaving them more vulnerable to a growing range of abuses, including wage theft and other employment law violations, unfair consumer contracts, sexual harassment, and employment and other discrimination based on race, sex and other protected characteristics; and

Whereas, Court interpretations that the FAA frequently preempts state actions means that it is up to Congress to make the statutory changes in the FAA needed to provide relief for citizens from the burden of involuntary mandatory arbitration often imposed under that act; now, therefore,

Be It Resolved: by the Senate of the State of New Jersey (the General Assembly concurring):

1. That the Legislature of this State respectfully urges the President and the Congress of the United States to enact legislation amending the Federal Arbitration Act to limit its application to transactions between commercial businesses, and thereby end the growing use under that act of mandatory arbitration imposed by businesses on employees, consumers, and other individuals, and thus protect the rights of citizens to legal recourse under employment, anti-discrimination, and other state and federal laws.

2. Copies of this resolution, as filed with the Secretary of State, shall be transmitted by the Clerk of the General Assembly or the Secretary of the Senate to the President and Vice President of the United States, the Majority and Minority Leaders of the United States Senate, the Speaker and Minority Leader of the United States House of Representatives, and each member of the Congress elected from this State.

3. Copies of this resolution shall also be transmitted by the Clerk of the General Assembly or the Secretary of the Senate to the governors and the leaders of the legislatures of every state so that they too can take action to urge Congress to act, and thus protect the rights of citizens to legal recourse under employment, anti-discrimination, and other state and federal laws.

STATEMENT

This concurrent resolution urges the President and the Congress of the United States to amend the Federal Arbitration Act to limit its application to transactions between commercial businesses, and thereby end the use under that act of mandatory arbitration imposed by businesses on employees, consumers, and other individuals, and thus protect the rights of citizens to legal recourse under employment, anti-discrimination, and other state and federal laws.