Putting Gilmer Where it Belongs: The FAA\u27s Labor Exemption

Relying on the Federal Arbitration Act, the Supreme Court in Gilmer v. Interstate/Johnson-Lane Corp. enforced an agreement to arbitrate all disputes to prevent judicial adjudication of a claim under the Americans With Disabilities Act. That decision has led employers of millions of workers to require an agreement to arbitrate future claims of violations of all statutes protecting employment rights as a condition of getting or keeping a job. This article argues that the exemption in Section 1 of the Act of contracts of employment of seamen, railroad employees, or any other class of workers engaged in foreign or interstate commerce if properly construed can eliminate this effect while still permitting enforcement of truly voluntary agreements to arbitrate such claims. The exemption has been held by all the circuits except the Ninth to apply only to workers actually engaged in interstate or foreign commerce, thus requiring enforcement against all others. The Ninth Circuit has now held that the exemption covers all employees whose employment is subject to federal regulation under the commerce clause. Certiorari has been granted to review that decision in Circuit City Stores v. Adams which will be argued this fall. The article argues that the Ninth Circuit ruling is correct on the commerce question but that the courts have erred in focusing only on that question and ignoring the other requirements of the exemption. The exemption, it is argued, should be limited to individual written contracts of employment (not ad hoc agreements to arbitrate existing disputes), only of rank and file workers, defined as non-managerial employees, and it should not be read as covering collective bargaining agreements. As a result of such a reading agreements to arbitrate statutory employment claims would be enforceable only with respect to those employees who, by and large, are really in a position to negotiate their terms of employment either individually or collectively. Application of the FAA, rather than Section 301 of the LRMA, to labor arbitration would be desirable. Resting enforcement of labor arbitration on Section 301 while useful at the time it was so decided by the Supreme Court in 1957 has had the unfortunate effect in practice of making labor arbitration awards more susceptible to reversal than would be the case if the standards of the FAA were to be applicable