What Employers and Litigants need to know about the major changes to AAA Employment Arbitration rules
Effective on May 1, 2025 the American Arbitration Association (AAA) implemented significant revisions in its Employment/Workplace Arbitration and Mediation Procedures. According to the AAA these revisions are intended to improve transparency, fairness, efficiency and efficiency in the arbitration process while also addressing evolving workplace disputes. These changes have important practical implications for anyone involved in employment arbitrage before the AAA. We will discuss the main updates and what they mean to litigants.
1. Expanded Scope: More Disputes are Covered
One update that is significant is the expansion of the rules. The rules were vulnerable to an argument that they only covered disputes involving bona fide employees and their employers, leaving open whether employment law claims filed by independent contractors would fall under the AAA rules. The new rules state that they apply to all work-related and workplace disputes, including those involving contractors. This change bolsters the argument that arbitration agreements between independent contractors and hiring entities may be enforced under the same arbitral forum rules and procedures as those between employers and employees, which in turn may increase the odds that a reviewing court will compel arbitration of claims between an independent contractor and a hiring entity where the arbitration agreement references the AAA Employment/Workplace Arbitration Rules and Mediation Procedures.
2. Administrative Changes – Clarifying Case Management
The AAA has strengthened its arbitrators’ authority to decline or cease administration of a case if required administrative or arbitrator fees are not paid. This change is largely in line with the existing California state law, Code of Civil Procedure section 1281.98. However, it now applies this California rule across the nation. If arbitration administration fees are not paid, the AAA may withdraw from the process and force disputes to court. Employers, hiring entities, and their counsel should confirm that internal processes are set up to handle the prompt disposition of administration fees to avoid any potential disruptions to ongoing arbitration proceedings.
Additionally, similar to how the strengthened fee enforcement reduces the risk of parties stalling proceedings, the AAA has extended the automatic stay period from 60 to 90 days when a party seeks court intervention at the outset of a case. This change gives courts more time to resolve important threshold issues prior to arbitration, helping to ensure that early legal challenges can be resolved without prematurely progressing the arbitration process. This change could also be significant for cases involving the Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act (EFAA) or California Private Attorney General Act (PAGA), where a judicial determination of the scope of arbitration may be required if there is a dispute between the parties. Procedural Updates – Embracing Virtual Hearings and Streamlining
Reflecting the post-pandemic shift toward remote work, the AAA has made virtual hearings the default format in employment cases – though parties can still agree to in-person proceedings, or arbitrators can decide the format.
Additionally, the new rules allow the AAA to consolidate multiple claims brought by the same party in separate matters under the same contract. For employers or hiring entities facing such a scenario, this rule change will offer streamlined proceedings but also increase the complexity and potential exposure of a single arbitration.
4. Expanded Arbitrator Powers – Subpoenas, Depositions, and Sanctions
Under the newly revised rules, arbitrators have significantly enhanced authority, including the ability to:
Issue subpoenas for witnesses and documents
- Order depositions[1]
- Modify or clarify awards on their own or at the parties’ request
- Impose sanctions for misconduct
- The AAA also reworked Rules 21 and 22, which pertain to the exchange of information, to emphasize the arbitrator’s authority to grant necessary information exchange as required for a party to fairly present its claims and defenses.
Additionally, the AAA revised arbitrator authority for allowing motions, including dispositive motions. The old rules gave general guidance to arbitrators on their authority to grant interim remedies, but the new rules clearly outline the arbitrator’s authority to allow any motions including dispositive ones, clarifying the scope of such motions and the process involved. Confidentiality and Transparency – What Will Be Published
Under the new confidentiality rules, arbitrators have authority to resolve disputes over confidentiality between parties. The AAA will continue to publish redacted arbitration award summaries and release quarterly data on employment caseloads.
The AAA’s rule revisions mark a meaningful shift in how employment disputes will be managed and resolved in arbitration. Whether you are an employee, independent contractor, or employer, understanding these changes is crucial to navigating the arbitration process effectively.
FOOTNOTES
State and federal law place limitations on arbitrators’ subpoena powers. California law allows arbitrators to subpoena witnesses and documents for arbitration hearings and depositions. However, the pre-hearing disclosure is only allowed in certain circumstances. Code of Civil Procedure section 1282.6). The Federal Arbitration Act (FAA) allows arbitrators to compel documents and witnesses only at the arbitration hearing. It does not allow for pre-hearing discovery. (Federal Arbitration Act (“FAA”), 9 U.S.C. Section 7).
