Topics: Arbitration Agreements, Legal Information
The American Arbitration Association (“AAA”) recently updated its “Employment/Workplace Arbitration Rules and Mediation Procedures” (formerly entitled the “Employment Arbitration Rules”), effective May 1, 2025. The updates to the rules will significantly impact how AAA employment arbitration proceedings are conducted.
The AAA published this news on their website and summarized the changes. The new rules follow the AAA opening up public comments to these rules to “incorporate input from stakeholders across industries and reflect the AAA’s ongoing commitment to fairness, transparency, and efficiency.” According to President and CEO of the AAA Bridget McCormack, the updates “reflect [AAA’s] ongoing commitment to maintaining the highest standards in ADR practice.” These updates are not merely procedural; there are substantive changes with many practical considerations to keep in mind when arbitrating a dispute before the AAA.
Below are key aspects of the updated rules:
- Arbitration now covers more than just bona fide employees
As shown by the new title (Employment/Workplace Arbitration Rules and Mediation Procedures), the AAA has broadened the scope of the rules to include application to “any dispute between an independent contractor and a business or organization when the dispute involves work or work-related claims under independent contractor agreements, including any statutory claims.” This practical effect is that a businesses’ consultants or freelancers could be required to arbitrate covered claims.
- Arbitrator power/discretion is extended
Pursuant to the new rules, arbitrators now have more authority to manage the arbitration proceedings in significant ways. They can now issue subpoenas for witnesses and documents and order depositions, and even impose sanctions against a party for failure to comply with its obligations under the rules, or, with an arbitrator’s order. Additionally, arbitrators can now modify or clarify an arbitration award on their own initiative, or the parties may request clarification or modification of an award. These changes reflect increased arbitrator authority to govern the arbitration process and increased mechanisms to enforce party misconduct.
- Dispositive motion practice
The new rules provide that the arbitrator “shall consider the time and cost associated with the briefing of a dispositive motion in deciding whether to allow any such motion.” The prior rules did not contain such mandatory consideration for the arbitrator.
- New rule regarding confidentiality
Under the new rules, arbitrators have the authority to resolve confidentiality disputes. Additionally, the AAA will publish redacted arbitration award summaries and release information quarterly on employment caseloads on their website.
- Virtual arbitration hearings are the new default
AAA rules now provide for virtual hearings as the default or “by other means as approved by the arbitrator unless agreed to by the parties”, or, if upon a party’s application, the arbitrator decides an in-person hearing is required. Virtual hearings signal alignment with post-pandemic shifts to utilizing technology to streamline legal processes. Virtual hearings as the default method will likely result in increased efficiencies with respect to hearing preparation and attendance, savings on costs and time, and reduced burdens on parties and witnesses.
- Administrative-type changes
The new rules now permit administrative consolidation of multiple cases filed by the same party asserting different claims under the same contract.
In addition, when a party seeks judicial intervention at the start of a case, the new rules have increased the stay period of the arbitration proceedings from 60 to 90 days in employment cases, to allow courts more time to issue rulings early on and prior to arbitration proceedings continuing.
Furthermore, there are clarified procedures for counsel to withdraw from a case.
Finally, the new rules have clearer guidelines outlining when the AAA may decline or cease the administration of a case if a required administrative fee or arbitrator fee is not paid. The update in this regard aligns with the California Code of Civil Procedure section 1281.98, whereby failure to pay arbitration administrative fees could cause disputes to be moved into state court. Check out CDF’s prior blog post on this topic for further information on this law.
If you are subject to an arbitrated agreement which follows the AAA Employment Arbitration rules, it is important to review the updated rules carefully to understand the impact of these changes.
