New Act Bans Forced Arbitration for Workers and Consumers, Restoring Right to Sue in Court

The Forced Arbitration Injustice Repeal Act is exactly what it sounds like: a bill designed to put the brakes on mandatory arbitration clauses. This legislation makes it illegal to enforce any pre-dispute agreement that forces an individual into private arbitration for future claims related to employment, consumer issues, antitrust violations, or civil rights.

Think of the fine print you click through when you start a new job, sign up for a credit card, or download an app. Often, deep within those terms and conditions is a clause saying that if you have a dispute with the company later—say, you’re wrongfully terminated or your credit card company overcharges you—you agree right now to handle it in private arbitration, not in a public courtroom. This bill voids those agreements outright for these four key areas. It takes effect the day it’s signed into law, applying to any claim that arises on or after that date (SEC. 4).

Your Day in Court: Taking Back the Right to Sue

For most people aged 25–45, this bill is a big deal because it hits where we live and work. The core change is found in Section 3, which adds a new chapter to federal arbitration law. If you are an employee (W-2 or independent contractor) and you face a dispute over pay, discipline, or firing, your employer can no longer use a contract you signed years ago to force you out of court. Similarly, if you have a consumer dispute over a service or product used for household needs, you get to choose your venue.

This means if you suspect wage theft or discrimination, you retain the right to file a lawsuit in the public court system, where proceedings are transparent and judges are accountable. Crucially, the bill ensures that a court—not an arbitrator—gets to decide if this new rule applies, sidestepping contractual language that might try to delegate that decision away (SEC. 3).

Strength in Numbers: Class Actions Are Back on the Table

Beyond just accessing court, the bill explicitly protects your right to team up. One of the most powerful tools consumers and workers have against large corporations is the ability to file a joint, class, or collective action lawsuit. Many forced arbitration clauses include a “joint-action waiver” that prevents this. This bill makes those waivers unenforceable for the covered disputes, meaning if a thousand people were subject to the same illegal practice (like a hidden fee or systemic discrimination), they can sue together again (SEC. 2).

For example, if you and your colleagues believe your employer is misclassifying you to avoid paying overtime, you can now join a collective action. This is vital because individual claims are often too small to justify the time and expense of a lawyer, but combined, they create leverage and accountability.

Who Pays the Price?

While this is a win for workers and consumers, it’s a major shift for large corporations and businesses that rely on mandatory arbitration. Companies favor arbitration because it is typically faster, cheaper, and private, which limits public scrutiny and large-scale financial judgments. This bill removes that cost- and risk-management tool, meaning companies will likely face increased litigation costs and greater exposure to class action lawsuits in federal courts.

There is one important carve-out to note: the bill generally doesn't apply to arbitration clauses found in collective bargaining agreements (union contracts). While the bill still allows workers to use the courts to enforce constitutional or statutory rights, the primary arbitration mechanism agreed upon by the union and the employer remains intact. This means union members might still be bound to arbitration for certain types of disputes if their contract dictates it (SEC. 3).