Continuing a long line of pro-arbitration decisions, the Supreme Court once again has ruled that a state law making it more difficult to enforce an arbitration agreement than other kinds of contracts runs afoul of the Federal Arbitration Act (FAA).
The High Court’s ruling in Kindred Nursing Centers v. Clark, No. 16-32 (May 15, 2017), reversed a decision by Kentucky’s highest court which had held that the state’s constitution forbids using a power of attorney to enter into an arbitration agreement unless the power of attorney document specifically permits doing so. The FAA prohibits states from discriminating against arbitration agreements that otherwise would be considered enforceable contracts.
Although the Court’s ruling is not employment-related, it is helpful to employers that use mandatory arbitration to resolve employment disputes because it adds to the body of case law supporting arbitration. As this case and others have illustrated, some state courts and legislatures remain hostile to arbitration. The Kindred decision reinforces the FAA’s mandate that arbitration agreements must be enforced, and that the states cannot directly or indirectly install roadblocks that prevent their enforcement.
A copy of the Court’s decision in Kindred is available here.
Members of the Equal Employment Advisory Council (EEAC) can read more here.