Key Notes:

  • US Budget bill renews ban on requiring employees to arbitrate employment claims.
  • Ban applies to certain DOD contractors and subcontractors.
  • Ban covers employment claims under Title VII and certain tort claims.

Renewed Ban on Government Contractors

In the consolidated budget bill, H.R. 1158, recently signed by President Trump on December 20, 2019 (P.L. 116-93), Section 8092 has renewed the ban on certain Department of Defense (DOD) contractors and subcontractors from requiring employees to arbitrate certain claims against the contractor. First enacted as part of the 2010 budget bill, this provision bars the DOD from contracting with entities that require employees to arbitrate any employment claims that may be brought under Title VII of the Civil Rights Act, as well as any tort claims related to sexual harassment or assault. The prohibition applies to any DOD contracts or subcontracts using appropriated funds of at least $1 million. The DOD has specifically included the prohibition as part of its acquisition regulations found at DFARS 252.222-7006.

For any of our clients in the defense industry who require their employees to sign pre-dispute arbitration agreements as a condition of employment, they should examine whether their current arbitration agreements comply with Section 8092 and the DFARS provision. If existing agreements contain broad-sweeping mandatory arbitration provisions, those agreements should be modified to create “carve-outs” for any Title VII claims or claims related to sexual harassment or sexual assault.