OREGON: Federal court shoots down state arbitration law

The Oregon federal district court recently struck down an Oregon law that required employers to follow certain steps before asking an employee to sign an arbitration agreement. The Oregon law states that an arbitration agreement between an employer and employee is only enforceable if: (1) the employer provided written notice of the arbitration requirement at least two weeks prior to the employee’s first day of work; or (2) the agreement was entered into upon an employee’s subsequent bona fide advancement. But the federal court said the law is preempted by the Federal Arbitration Act (FAA), which promotes the use of arbitration agreements as a means for settling disputes. The court said Oregon was not authorized to impose additional requirements beyond the FAA (Bettencourt v. Brookdale Senior Living Communities, Inc., D Or, Jan. 2010).

Tips: This court’s ruling does not completely invalidate Oregon’s arbitration law (a state court could adopt a different interpretation), but it certainly calls the law’s validity into question. Vigilant will keep you posted on any new developments. In the meantime, we recommend that you follow the law as it’s currently written to ensure enforceability of your arbitration agreements. Check out our Legal Guide, “Mandatory Arbitration Agreements” (1310) if you have questions or call your Vigilant staff representative.