Monday, December 21, 2009

New Restrictions on Arbitration Clauses in Defense Contracts

The Blog of Legal Times (aka BLT) reports that President Obama signed a 2009-10 spending bill including significant restrictions on arbitration clauses used by defense contractors. Binding pre-dispute employee/employer arbitration clauses have been somewhat of a hot issue in employment law lately. As BLT reports:
Under Section 8116 of the bill, no money can go to a defense contractor unless the contractor agrees not to enter into or enforce any employment contract “that requires, as a condition of employment, that the employee or independent contractor agree to resolve through arbitration any claim under title VII of the Civil Rights Act of 1964,” or many tort claims.
The spending bill includes exemptions for small contracts and a "national security" waiver.

The BLT piece mentions Jamie Leigh Jones. Ms. Jones recently testified before the Senate Judiciary Committee (Video | Transcript). She has a harrowing yet compelling story supporting this new restriction. Sadly, Ms. Jones reported she was raped by her coworkers while working on a defense contract in Iraq. Her employer sought to resolve her claims through arbitration, citing a pre-dispute arbitration agreement.

Joe Markowitz, a California attorney, has done some interesting blog entries on pre-dispute arbitration agreements. A restriction on military contractors may be a small victory for arbitration clause opponents, but it's an important signal that the administration and Congress support increased restrictions. Additional changes may very well be forthcoming... I'll keep you posted!