Kentucky Revives Enforceability of Employment Arbitration

Kentucky's governor recently signed a bill enabling employers to require an employee or person seeking employment to execute an agreement for arbitration as a condition or precondition of employment. This legislation overrules the Kentucky Supreme Court decision in Northern Kentucky Area Development District v. Danielle Snyder which relied on a Kentucky statute forbidding any “employer [from requiring] as a condition or precondition of employment that any employee or person seeking employment waive, arbitrate, or otherwise diminish any existing or future claim, right, or benefit to which the employee or person seeking employment would otherwise be entitled.” KSA 336.700(2). The Kentucky Supreme Court ruled the Federal Arbitration Act (FAA) did not preempt the Kentucky statute because, instead of targeting arbitration specifically, the  KSA 336.700(2) “is a law that prohibits employers from firing or failing to hire on the condition that the employee or prospective employee waive all existing rights that employee would otherwise have against the employer.”

Missouri Supreme Court Enforces Arbitration Agreement in At-Will Employment

An at-will employee argued that his promise to arbitrate was not supported by consideration. Soars v. Easter Seals Midwest, 563 S.W.3d 111 (Mo. 2018). While both lower courts agreed with the employee and thus refused to compel arbitration, the Missouri Supreme Court reversed because the agreement “includes a delegation clause, identical to the one upheld in Rent-A-Center, West, Inc. v. Jackson, 561 U.S. 63 (2010), providing:

The Arbitrator, and not any federal, state, or local court or agency, shall have

exclusive authority to resolve any dispute relating to the interpretation,

applicability, enforceability or formation of this Agreement including, but

not limited to any claim that all or any part of this Agreement is void or

voidable.”

“For [employee] to properly contest the validity of [this] delegation provision, he must have challenged the delegation provision specifically,” according to the Missouri Supreme Court. “The delegation provision is supported by adequate consideration because the provision, severed from the rest of the Agreement and considered by itself, is a bilateral contract supported by consideration.” So the court held that it was for the arbitrator to consider the employee’s other arguments.

In contrast, two dissenters “believe the arbitration agreement in this case is not enforceable because it lacked legal consideration due to Soars’ at-will employment status.”

Lisa Larkin of Baker Sterchi Cowden & Rice LLC covers the case with more details.

Baseball #Arbitration Helps Uphold AT&T/Time Warner Merger

“Baseball arbitration” is a common name for final-offer arbitration, in which the arbitrator’s choice of rulings is limited to choosing between two dollar amounts, one proposed by each disputing party. In Major League Baseball this procedure is used to resolve salary disputes. More on baseball arbitration can be found here.

The U.S. Court of Appeals for the D.C. Circuit recently mentioned baseball arbitration as it upheld a lower court ruling approving the merger of AT&T and Time Warner. While the U.S. Dept. of Justice sought to block the merger, CNN explains, irrevocable offers to engage in baseball arbitration were key to defusing this concern for the Court of Appeals.