Effective May 1, 2025, the American Arbitration Association (“AAA”) implemented significant revisions to AAA Employment/Workplace Arbitration Rules and Mediation Procedures. According to the AAA, these revisions aim to improve transparency, efficiency, and fairness in the arbitration process, while also addressing the evolving needs of workplace disputes. The changes carry important practical considerations for anyone involved in employment arbitration before the AAA. Below we discuss the key updates and what they mean for litigants.
1. Expanded Scope – More Disputes Covered
One of the most significant updates is the expansion of the rules’ scope. Previously, the rules were vulnerable to the argument that they only covered disputes between bona fide employers and their employees, leaving open the question of whether employment law claims brought by independent contractors would be subject to the AAA rules. With the new changes, the rules explicitly provide that they apply to all workplace and work-related disputes, including those involving independent contractors. This change bolsters the argument that arbitration agreements between independent contractors and hiring entities may be enforced under the same arbitral forum rules and procedures as those between employers and employees, which in turn may increase the odds that a reviewing court will compel arbitration of claims between an independent contractor and a hiring entity where the arbitration agreement references the AAA Employment/Workplace Arbitration Rules and Mediation Procedures.
2. Administrative Changes – Clarifying Case Management
The AAA has strengthened its arbitrators’ authority to decline or cease administration of a case if required administrative or arbitrator fees are not paid. This change largely falls in line with existing California state law (Code of Civil Procedure, section 1281.98), but now applies the California rule across the country. Failure to pay arbitration administration fees could now result in the AAA withdrawing from the process entirely, potentially pushing disputes into court. Employers, hiring entities, and their counsel should confirm that internal processes are set up to handle the prompt disposition of administration fees to avoid any potential disruptions to ongoing arbitration proceedings.
Additionally, similar to how the strengthened fee enforcement reduces the risk of parties stalling proceedings, the AAA has extended the automatic stay period from 60 to 90 days when a party seeks court intervention at the outset of a case. This change provides courts with more time to address important threshold issues before arbitration proceeds, helping ensure that early legal challenges are resolved without prematurely advancing the arbitration process. This change may also have significance for cases involving the Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act (“EFAA”) or California Private Attorney General Act (“PAGA”), where there may be a need for a judicial determination as to the scope of arbitration if there is a disagreement between the parties.
3. Procedural Updates – Embracing Virtual Hearings and Streamlining
Reflecting the post-pandemic shift toward remote work, the AAA has made virtual hearings the default format in employment cases – though parties can still agree to in-person proceedings, or arbitrators can decide the format.
Additionally, the new rules allow the AAA to consolidate multiple claims brought by the same party in separate matters under the same contract. For employers or hiring entities facing such a scenario, this rule change will offer streamlined proceedings but also increase the complexity and potential exposure of a single arbitration.
4. Expanded Arbitrator Powers – Subpoenas, Depositions, and Sanctions
Under the newly revised rules, arbitrators have significantly enhanced authority, including the ability to:
- Issue subpoenas for witnesses and documents[1]
- Order depositions
- Modify or clarify awards on their own or at the parties’ request
- Impose sanctions for misconduct
The AAA also reworked Rules 21 and 22, which pertain to the exchange of information, to emphasize the arbitrator’s authority to grant necessary information exchange as required for a party to fairly present its claims and defenses.
Additionally, the AAA revised arbitrator authority for allowing motions, including dispositive motions. The former rules provided general guidance on the arbitrator’s authority to grant interim measures, while the revised rules explicitly outline the arbitrator’s authority to allow motions, including dispositive motions, thereby clarifying the scope and process for such motions.
5. Confidentiality and Transparency – What Will Be Published
Under the new confidentiality rules, arbitrators have authority to resolve disputes over confidentiality between parties. The AAA will continue to publish redacted arbitration award summaries and release quarterly data on employment caseloads.
The AAA’s rule revisions mark a meaningful shift in how employment disputes will be managed and resolved in arbitration. Whether you are an employee, independent contractor, or employer, understanding these changes is crucial to navigating the arbitration process effectively.
FOOTNOTES
[1] State and federal law place limitations on arbitrators’ subpoena powers. Under California law, although arbitrators generally have authority to issue subpoenas for both witness testimony and document production for arbitration hearing and depositions, pre-hearing discovery is limited to certain circumstances. (Code of Civil Procedure, section 1282.6). Similarly, the Federal Arbitration Act (“FAA”) permits arbitrators to compel witnesses and document only at the arbitration hearing, not for general pre-hearing discovery. (Federal Arbitration Act (“FAA”), 9 U.S.C. section 7).
