N.J. Bias Arbitration Ban Invalid When at Odds With Federal Law

New Jersey’s 2019 amendment of the state’s anti-bias law to ban agreements requiring workers to arbitrate discrimination claims is preempted when it conflicts with the Federal Arbitration Act, a state appeals court ruled in a case of first impression.

The FAA has been recognized by the U.S. Supreme Court as placing agreements to arbitrate on the same footing as all other contracts, the New Jersey Appellate Division said. So long as such agreements otherwise meet standard contract principles, they must be enforced when governed by the FAA, the court said.

Any other result would violate the supremacy clause of the ...