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Section 8116 of the Department of Defense Appropriations Act for Fiscal Year 2010 bars certain government contractors from including in their employment agreements binding arbitration clauses with regard to specific types of employment disputes.

Originally offered as an amendment to the Act by Senator Al Franken (D-MN), Section 8116 states that none of the funds appropriated by the Act may be expended on any federal contract in an amount in excess of $1 million unless the contractor agrees not to require its employees to arbitrate certain employment claims.

Section 8116 states that contractors may not require their employees to arbitrate any claim arising under Title VII of the Civil Rights Act of 1964 or “any tort related to or arising out of sexual assault or harassment, including assault and battery, intentional infliction of emotional distress, false imprisonment, or negligent hiring, supervision, or retention…”

Section 8116 applies to both government contractors and their subcontractors. An additional requirement of the Section states that within 180 days, contractors must certify that any subcontractors with a contract in excess of $1 million have agreed not to include such mandatory arbitration provisions in their employee agreements. This may signal Congress’ interest in barring arbitration clauses in other types of employment agreements in the future.

The Department of Defense Appropriations Act for Fiscal Year 2010 was signed into law by President Barack Obama in December 2009.

To learn more about the implications of Section 8116 and how to properly comply with its requirements, please contact:

Peter S. Pantaleo

Claudia T. Salomon

Tara M. Lee