Most military contractors will no longer be able to enforce mandatory arbitration clauses in their employment contracts under a provision signed into law over the weekend. Specifically, no money can go to a defense contractor unless the contractor agrees not to enter into or enforce any employment contract "that requires, as a condition of employment, that the employee or independent contractor agree to resolve through arbitration any claim under title VII of the Civil Rights Act of 1964," or many tort claims. The restrictions will apply also to subcontractors starting in six months. Contracts and subcontracts under $1 million are exempt from the provision.
As a result of the new law, we recommend that all military contractors include a provision in their employment agreements whereby the parties agree to resolve all disputes related to the employment relationship by bench rather than jury trial. This means that the parties agree to have a judge, rather than a jury, make a decision with regard to any such dispute.
For more information on this topic, please contact Nicole Windsor at windsor@bowie-jensen.com.
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