QOTW: Arbitration Clauses

Over the past couple of years arbitration clauses have been invoked to sidetrack and/or deflect participant litigation. This week we asked plan sponsors if their plan has such a clause. Only one respondent indicated that they do, more than half (56.9 percent) do not, and the rest are unsure.

A handful of respondents stated that they are currently considering arbitration clauses. Comments include:

• I am seeing a lot more information on this and it will be interesting to see how other plan sponsors are handling.
• It would be something to look at in the future.
• Our committee has discussed it but it is not in our plan currently.
• we are investigating this option.
• We just reviewed this again in the second half of 2021 as we worked on restating our plan.  Our ERISA attorney feels it is not necessarily the best course as the Courts are really split on whether it is enforceable and, when pushed, some courts are suggesting that they are a bit "offended" at the provision. We are continuing to do research.
• We are all in California, which has not been terribly supportive of Arbitration Clauses in employment agreements. I'd like to understand more on this subject.