On January 14, 2010, Judge Anna Brown of the District of Oregon concluded that ORS §36.620(5), which is part of the Oregon Uniform Arbitration Act, is preempted by the Federal Arbitration Act (FAA) when the FAA applies. (The FAA generally applies to arbitration agreements where the employer conducts business across state lines.) Bettencourt v. Brookdale Senior Living Communities.

We have expected this holding since the Oregon legislature added section (5) to ORS 36.620. It provides:

“A written arbitration agreement entered into between an employer and employee and otherwise valid under subsection (1) of this section is voidable and may not be enforced by a court unless:

(a) The employer informs the employee in a written employment offer received by the employee at least two weeks before the first day of the employee’s employment that an arbitration agreement is required as a condition of employment; or

(b) The arbitration agreement is entered into upon a subsequent bona fide advancement of the employee by the employer.”

In Bettencourt, the employee sued Brookdale, her former employer, for alleged unpaid wages, unlawful discrimination and retaliation and wrongful discharge. Brookdale asked the court to compel arbitration pursuant to an agreement between the parties. Ms. Bettencourt opposed the motion to compel, arguing, in part, that the arbitration agreement was unenforceable under ORS § 36.620(5) because it was not formed before employment commenced or upon bona fide advancement.

The Court noted that the FAA was enacted to “advance the federal policy favoring arbitration agreements” and provides that arbitration agreements shall generally be found valid, irrevocable and enforceable. It then evaluated the validity of the parties’ arbitration agreement in light of the FAA’s requirement that arbitration agreements be placed on equal footing with other contracts. Finding that ORS §36.620(5) “renders unenforceable arbitration agreements that would otherwise be enforceable under the FAA,” the Court held that the FAA preempts ORS 36.620(5) and, “as a result, §36.620(5) is not a valid basis for concluding the Agreement is unenforceable.”

Bullard Law will continue to track the application and interpretation of ORS 36.620(5) while assisting employers with employee arbitration agreements. Please feel free to contact Bullard Law with any questions concerning this decision or any other labor, employment and benefits issues. 

- Jennifer N. Warberg & Sarah M. Petersen