Is a pre-dispute arbitration clause enforceable in Oregon, and what extra conditions apply to an employer's clause?
An agreement contained in a record to submit any existing or subsequent controversy to arbitration is valid, enforceable and irrevocable except upon a ground that exists at law or in equity for the revocation of a contract (ORS 36.620(1)). A written arbitration agreement between an employer and employee, otherwise valid under subsection (1), is voidable and may not be enforced by a court unless (a) at least 72 hours before the first day of employment the employee received notice in a written employment offer that an arbitration agreement is required as a condition of employment and was provided the agreement meeting subsection (6), including its acknowledgment, or (b) the agreement is entered into upon a subsequent bona fide advancement of the employee (36.620(5)). The acknowledgment must be signed by the employee and include the statutory language in boldfaced type (36.620(6)). Most of the Oregon Uniform Arbitration Act can be varied by agreement, but before a controversy arises the parties may not waive or vary ORS 36.620(1), and the same restriction protects ORS 36.615, 36.630, 36.675(1) and (2), 36.720 and 36.730 (ORS 36.610(1)-(2)). A second list may not be waived or varied at any time, before or after a dispute: ORS 36.610 itself and ORS 36.625, 36.660, 36.680, 36.690(4) or (5), 36.700, 36.705, 36.710, 36.715(1) or (2), 36.735 and 36.740 (36.610(3)); and neither list applies to an agreement to arbitrate between two or more insurers or self-insured persons about the provision of insurance (36.610(4)). Subject to ORS 36.625(8), the court decides whether an agreement to arbitrate exists or a controversy is subject to one, an arbitrator decides whether a condition precedent to arbitrability has been fulfilled, and a court challenge does not of itself stop the arbitration (36.620(2) to (4)).
The trap
An employer's arbitration agreement presented without the 72-hour written-offer notice, and not tied to a bona fide advancement, is voidable under 36.620(5) even though it is otherwise valid. A pre-dispute clause that purports to contract out of 36.620(1) is outside what ORS 36.610 permits the parties to vary, and so is a pre-dispute term that unreasonably restricts notice of the initiation of an arbitration proceeding or a neutral arbitrator's disclosure of facts, or waives the right to be represented by a lawyer, except that an employer and a labor organization may waive lawyer representation in a labor arbitration (36.610(2)(b) to (d)). Whether the Federal Arbitration Act displaces the 36.620(5) conditions is not answered by the sections quoted in this rule.
8 authorities
- statuteORS 36.620enactment date not established
The words that state the rule
An agreement contained in a record to submit to arbitration any existing or subsequent controversy arising between the parties to the agreement is valid, enforceable and irrevocable except upon a ground that exists at law or in equity for the revocation of a contract.
- statuteORS 36.620enactment date not established
The words that state the rule
A written arbitration agreement entered into between an employer and employee and otherwise valid under subsection (1) of this section is voidable and may not be enforced by a court unless: (a) At least 72 hours before the first day of the employee’s employment, the employee has received notice in a written employment offer from the employer that an arbitration agreement is required as a condition of employment, and the employee has been provided with the required arbitration agreement that meets the requirements of, and includes the acknowledgment set forth in, subsection (6) of this section; or (b) The arbitration agreement is entered into upon a subsequent bona fide advancement of the employee by the employer.
- statuteORS 36.620enactment date not established
The words that state the rule
The acknowledgment required by subsection (5) of this section must be signed by the employee and must include the following language in boldfaced type:
- statuteORS 36.620enactment date not established
The words that state the rule
I acknowledge that I have received and read or have had the opportunity to read this arbitration agreement. I understand that this arbitration agreement requires that disputes that involve the matters subject to the agreement be submitted to mediation or arbitration pursuant to the arbitration agreement rather than to a judge and jury in court.
- statuteORS 36.620enactment date not established
The words that state the rule
Subject to ORS 36.625 (8), the court shall decide whether an agreement to arbitrate exists or a controversy is subject to an agreement to arbitrate. (3) An arbitrator shall decide whether a condition precedent to arbitrability has been fulfilled. (4) If a party to a judicial proceeding challenges the existence of, or claims that a controversy is not subject to, an agreement to arbitrate, the arbitration proceeding may continue pending final resolution of the issue by the court, unless the court otherwise orders.
- statuteORS 36.610enactment date not established
The words that state the rule
Except as otherwise provided in this section, a party to an agreement to arbitrate or to an arbitration proceeding may waive, or the parties may vary the effect of, the requirements of ORS 36.600 to 36.740 to the extent permitted by law.
- statuteORS 36.610enactment date not established
The words that state the rule
Before a controversy arises that is subject to an agreement to arbitrate, a party to the agreement may not: (a) Waive or agree to vary the effect of the requirements of this section or ORS 36.615, 36.620 (1), 36.630, 36.675 (1) or (2), 36.720 or 36.730; (b) Agree to unreasonably restrict the right under ORS 36.635 to notice of the initiation of an arbitration proceeding; (c) Agree to unreasonably restrict the right under ORS 36.650 to disclosure of any facts by a neutral arbitrator; or (d) Waive the right under ORS 36.670 of a party to an agreement to arbitrate to be represented by a lawyer at any proceeding or hearing under ORS 36.600 to 36.740, but an employer and a labor organization may waive the right to representation by a lawyer in a labor arbitration.
- statuteORS 36.610enactment date not established
The words that state the rule
A party to an agreement to arbitrate or arbitration proceeding may not waive, or the parties may not vary the effect of, the requirements of this section or ORS 36.625, 36.660, 36.680, 36.690 (4) or (5), 36.700, 36.705, 36.710, 36.715 (1) or (2), 36.735 or 36.740 or section 3 (1) or (3) or 31, chapter 598, Oregon Laws 2003. (4) Subsections (2) and (3) of this section do not apply to agreements to arbitrate entered into by two or more insurers, as defined by ORS 731.106, or self-insured persons for the purpose of arbitration of disputes arising out of the provision of insurance.
“Defective” means that reading found something to correct. What you are reading is the rule as it stands after that reading.