Volume 72, Number 6

December 1997

Predispute Agreements To Arbitrate Statutory Employment Claims

Samuel Estreicher

Over the last decade, the Supreme Court, through its interpretation of the Federal Arbitration Act of 1925 (FAA), has expanded the role of arbitration in the resolution of legal disputes, including disputes arising under federal and state statutes. Recently, much debate has arisen over the issue of whether the FAA applies to employment contracts, and whether employees can enter into binding predispute agreements to arbitrate statutory employment claims. In Gilmer v. Interstate/Johnson Lane Corp., the Supreme Court held that under the FAA, employees could in fact enter into such predispute agreements. Because the agreement in Gilmer was not part of an employment contract, however, the Supreme Court left open a critical question, namely the scope of the FAA exclusion of employment contracts for certain employees engaged in foreign or interstate commerce. In this Article, Professor Estreicher first addresses the various public policy arguments raised by opponents of predispute agreements to arbitrate statutory employment claims. Addressing each one in turn, he concludes that where certain procedural safeguards are implemented, arbitration is indeed a proper forum for the resolution of statutory employment claims, and that predispute agreements to arbitrate provide valuable benefits for both employers and employees. Turning to the issue left open by the Court in Gilmer, Professor Estreicher explores the confusion surrounding the scope of the FAA exclusion of employment contracts, which in large part stems from an uncertain legislative history, and suggests that, given recent Court decisions and the policies underlying them, a narrow interpretation of the exclusion by the Supreme Court is probable. Professor Estreicher concludes by stressing that a proper arbitration system can advance the public policies contained in federal and state employment statutes.