This week Federal District Court Judge Anne Thompson issued a procedural decision in litigation filed by NJCJI and our friends at the US Chamber defending arbitration rights in employment contracts against a legislative prohibition.

The legislation, which was adopted in 2019, bans all prospective waivers of “procedural rights” in employment contracts.  NJCJI explained at the time that the legislation would prohibit pre-dispute arbitration agreements between employers and their employees and was therefore preempted by the Federal Arbitration Act. 

The legislation also provides for enforcement by the NJ Attorney General and provides for fee-shifting – putting NJCJI members that use arbitration agreements in a difficult position.  If an employer in New Jersey wants to continue to use arbitration to ensure prompt and efficient resolution of employment disputes, as guaranteed by federal law, they risk a suit by the AG under the NJLAD.  Defending a NJLAD case is expensive.  Losing one, even more so.

NJCJI and the US Chamber therefore filed in federal court, seeking a declaration that the legislation is preempted by the FAA and a permanent injunction precluding the Attorney General from enforcing the law.  The AG responded seeking a motion to dismiss our claim, arguing the claim is not ripe and challenging our standing to bring the claim.

These arguments by the Attorney General were rejected this week when Judge Thompson denied the Attorney General’s motion to dismiss. The case will proceed to oral argument in October.  

Please contact Alida if you would like to discuss this important case and recent developments further.