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March 22, 2018 Practice Points

Appropriations Act Targets Arbitration

By Mark Kantor

On March 21, congressional negotiators reached a last-minute agreement on a 2,232-page “Consolidated Appropriations Act, 2018” to implement the bipartisan budget agreement from earlier this year. Such “must pass” legislation is always a popular vehicle for “policy riders.” This year, one such rider appears to have successfully made its way into the final legislation. It prohibits federal contractors or subcontractors, under federal contracts exceeding $1 million, from entering into or enforcing pre-dispute arbitration provisions under which an employee or independent contractor agrees in advance to resolve through arbitration “any claim under title VII of the Civil Rights Act of 1964 or any tort related to or arising out of sexual assault or harassment, including assault and battery, intentional infliction of emotional distress, false imprisonment, or negligent hiring, supervision, or retention.” Title VII, of course, covers all employment discrimination, not just sexual assault or harassment.

There is an exclusion in the provision for agreements that may not be enforced in U.S. courts. In addition, the secretary of defense can waive the prohibition if “the Secretary or the Deputy Secretary personally determines that the waiver is necessary to avoid harm to national security interests of the United States, and that the term of the contract or subcontract is not longer than necessary to avoid such harm.”

Mark Kantor is a member of the College of Commercial Arbitrators in Washington, D.C.

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