The National Football League (NFL) is in the spotlight this season, not because of any certain game on the field, but for a legal battle off it. Last week, the Second U.S. Circuit Court of Appeals agreed that a NFL coach could bring his race discrimination claims against the NFL and several NFL teams in court although he had signed an arbitration agreement.
The arbitration agreement between the NFL coach and several teams he had previously been employed by throughout his career stated NFL Commissioner Roger Goodell would serve as the arbitrator in the event any legal dispute arose between the parties. The Second Circuit held that this provision “provides for arbitration in name only” and lacks the protections provided for and considered under the Federal Arbitration Act (FAA).
Under the FAA, employers and employees can agree to resolve disputes through arbitration, often offering a faster and more cost-effective alternative to litigation. But as the Second Circuit made clear, arbitration agreements may not always deliver a win to avoid litigating in court. If the agreement lacks neutrality or tilts too heavily in favor of one side, courts can and will strike them down as unenforceable, as they did here.
Takeaways for Employers
Arbitration is often seen as a favored approach to resolve employment claims. However, poorly drafted agreements can turn this gameplay into a costly loss. Here’s some ways employers can avoid having their arbitration agreements penalized:
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