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AIM-supported bills on discrimination and arbitration agreements heard in Senate committee

A Missouri Senate committee this week heard two bills that Associated Industries of Missouri believes will help the state’s business climate by keeping employers out of court for frivolous lawsuits.

Senate Bill 745 sponsored by Senator Gary Romine (R-Farmington) is legislation that appears annually to align the state’s human rights law with the federal law by changing the standard of proving discrimination to a “motivating factor.” Missouri courts have recently moved the standard to a “contributing factor”, which prevents fair application of the law and unreasonably shifts the burden of proof from the plaintiff to the defendant employer.

In testimony before the Senate’s Small Business, Insurance and Industry Committee, AIM president Ray McCarty says the current standard stands court procedure on its head with the defendant having to prove their innocence.

“The federal law requires the plaintiff prove the employer was motivated by discrimination – that discrimination was one of the motives for the employment action – for the plaintiff to prevail. We believe that standard should apply in Missouri law and this bill would accomplish that goal,” said McCarty.

The bill would bring Missouri back in line with many neighboring states, which currently have a competitive advantage due to Missouri court’s liberal interpretation of the discrimination standard. Other business organizations testified in favor of the bill including the Missouri Grocers Association, the Missouri Retailers Association and the Missouri chapter of the National Federation for Independent Business.

Opponents included the ACLU, the Missouri Association of Trial Attorneys, and the National Education Association.

The legislation has passed through the General Assembly on several occasions, only to be vetoed by Governor Nixon.

Sen. Romine closed his testimony on the bill giving his viewpoint from a businessman’s perspective.

“Discrimination on any level is wrong, but business people like myself are being victimized by frivolous lawsuits,” said Romine.

The committee heard the testimony and did not take immediate action on the bill.

Committee members also heard testimony on Senate Bill 746, also sponsored by Sen. Romine, legislation that seeks to counteract the Missouri state courts’ hostility towards arbitration agreements between employers and at-will employees.

Arbitration between employers and at-will employees has been specifically endorsed by the United States Supreme Court, other federal courts, and state courts as a way of fairly, quickly, and cost-effectively resolving disputes that may arise (whether those disputes are brought by the employer or employee). But there’s a problem.

“Even though employment arbitration agreements are widely enforced throughout the country, the Missouri state courts routinely find these agreements unenforceable and allow plaintiff’s lawyers to take the dispute to court, a clear violation of the intent of arbitration agreements,” McCarty told committee members. Senate Bill 746 would leave it up to the arbitrator – an impartial third party – to decide whether the arbitration agreement is enforceable and would take this authority away from the Missouri state courts. In deciding whether the arbitration agreement is enforceable, the bill provides the arbitrator with guidance and factors to consider.

Janet Mark, Hallmark Associate General Counsel, provided key testimony on the many benefits of employment arbitration, and the need for the legislation to counteract the state courts’ hostility and to place arbitration agreements on equal footing with other types of agreements. She pointed out that the employer and employee jointly select the arbitrator who will decide the dispute and the arbitrator is often a lawyer or former judge. She said employees are more likely to get a hearing on the merits through arbitration (rather than in litigation) and because arbitration is less formal than litigation, employees may decide to pursue their claims without hiring and paying a lawyer.

In addition to Hallmark and AIM, the bill was supported by other employer groups, JE Dunn Construction, Cerner, Burns and McDonnell, Kansas City Power and Light, and the Missouri Insurance Coalition.  Only the Missouri Association of Trial Attorneys and Empower Missouri opposed the bill.

As is customary, the committee adjourned without taking action, but action is expected soon.

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