Monthly Archives: May 2012

FINRA Rules 13201 and 13802: Arbitrating Statutory Employment Discrimination Claims

By:  John F. Fullerton III

This is the third in our series of posts on practice and procedure in employment-related arbitrations before FINRA.  Check back often for future posts, subscribe to The Bellwether, or follow @bellwetherblog on Twitter so you don’t miss any!

Once upon a time, it was mandatory under Form U4 that registered representatives file any statutory claims of discrimination (such as age, gender, or race discrimination) in arbitration rather than in court.  A well known Supreme Court case decided in 1991, Gilmer v.  Interstate/Johnson Lane Corp., upheld that requirement.  Starting in January 1999, however, the requirement for registered persons to arbitrate claims of statutory employment discrimination was eliminated from the rules of the NYSE and NASD, FINRA’s predecessor organizations.  Since then, discrimination claims still can be and often are heard and decided by FINRA arbitrators—but only if both parties voluntarily agree to arbitration, either before or after a dispute arises.  In other words, arbitration of statutory discrimination claims is no longer a required condition of employment for all registered representatives by virtue of language in the U4, but rather, must be agreed to separately in an employment agreement or an employer’s mandatory arbitration program.

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