Recent news reports indicate that two bills, S-3541 and A-5287, are making their way through our state Legislature with the intent of restricting an employer’s ability to include pre-dispute arbitration provisions in employment contracts. We suggest that this is a fraught effort, if for no other reason than the preemption effect of the Federal Arbitration Act on state attempts to impose conditions or limitations on arbitration not applicable to other contracts and inconsistent with the FAA. State statutes and case law restricting arbitration in nursing home disputes and class-action waivers have been overturned on preemption grounds, based on Article VI of the US Constitution, where interstate commerce is concerned. It is difficult to discern ways to avoid FAA preemption in the employment context also.
Two less problematic employee-protective scenarios exist, though.
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