Arbitration clauses are ubiquitous in employment contracts and consumer agreements for goods and services ranging from news subscriptions to car purchases. And some state lawmakers fear those agreements too often harm the employees or consumers asked to sign them.
Bill sponsors highlighted the prevalence of mandatory arbitration in advocating for Senate Bill 93 during a Jan. 29 Judiciary Committee hearing. The bill seeks to change some practices around arbitration in Colorado.
“We completely acknowledge the fact that we can’t get rid of forced arbitration because that’s federal law, and we also acknowledge that arbitration has a place in our system,” said Sen. Mike Foote, a sponsor of Senate Bill 93, at the hearing. He said the bill intends to help level the power balance in arbitration disputes between large companies and individual consumers or employees.
Foote said statistics about arbitration are scarce. But he cited a student loan provider that won 96% of arbitration disputes and a credit card company that won 92% of its disputes in arbitration in a given year. He contrasted the numbers with much higher rates of consumers winning their disputes in small claims courts.
Senate Bill 93 governs ethical standards for arbitrators and establishes guidance for cost-shifting provisions in arbitration agreements. The bill prohibits waiving challenge of an arbitrator’s partiality before a person files a claim and requires early disclosure of information about an arbitrator that could bias them. The bill also clarifies that awards of expenses should be given to the winning party in arbitration unless a more specific law says otherwise.
It passed the Judiciary Committee on a 3-2 vote. Sens. Julie Gonzales, Robert Rodriguez and committee chair Pete Lee voted in favor of the bill. Sens. John Cooke and Bob Gardner voted against it.