Labor & Employment Law Daily Wrap Up, EXPERT INSIGHTS—American Arbitration Association Announces New Consumer And Employment Arbitration Rules, (May 12, 2025)

Law Firms Mentioned:Mayer Brown

Organizations Mentioned:Mayer Brown, LLP

By Archis Parasharami, Kevin Ranlett and Daniel E. Jones of Mayer Brown

As we previously reported, the American Arbitration Association has been considering changes to its rules for consumer and workplace arbitrations. In February 2025, the AAA requested public comments on proposed changes to its rules. We submitted comprehensive comments to identify ways to improve the proposed rules to ensure fairness for all while reducing the risks of abuse of the arbitration process—especially in mass arbitrations.

The AAA has published at least some of the comments it received about its proposed consumer and employment rules, although the AAA allowed a number of commentators to remain anonymous.

After considering these comments, the AAA issued the final version of its new Consumer and Employment/Workplace Arbitration Rules, which became effective on May 1, 2025. In some good news, the AAA adopted some of our suggestions. But unfortunately other aspects of the rules will not improve the fairness and efficiency of arbitrations.

The AAA’s rule changes underscore the need for businesses to consider both whether to designate the AAA as the arbitration administrator in their arbitration provisions and, if so, whether any revisions to those provisions should be made to account for the new rules.

What’s new?

The AAA has published a blog post describing the changes to the Consumer and Employment/Workplace Rules. Here are some key changes:

AAA Consumer Clause Registry changes: The new Consumer rules significantly change how businesses may register arbitration clauses with the AAA and renew existing registrations. As before, the AAA will register arbitration clauses only if it concludes that the clauses comply with the AAA's Consumer Due Process Protocol. But the AAA now has announced that an administrative finding of compliance is not final and can be revisited by arbitrators in any subsequent case. In addition, the AAA has declared that, once a clause is registered, if "[i]f a business declines to pay the annual Registry fee, … the AAA will decline to administer consumer arbitrations arising from that arbitration agreement," and "[c]harging an expedited review fee as an alternative is not permissible."
Dispositive motions: The Consumer and Employment/Workplace rules include new language that may discourage arbitrators from authorizing the filing of dispositive motions. Dispositive motions are often the most efficient way to resolve or simplify an arbitration—especially if some or all claims can be resolved as a matter of law. The rules now say that arbitrators must expressly "consider the time and cost associated with the briefing of a dispositive motion in deciding whether to allow any such motion."
Potential for expanded discovery: The new Consumer rules add procedures for parties to issue document requests and expand the arbitrator's authority to order other types of discovery, including interrogatories or depositions.
Documents-only cases: Under the new Consumer rules, any case in which $25,000 or less is at stake will be resolved solely on the basis of documents submitted by the parties, unless "the arbitrator decides that a hearing is necessary." Previously, a hearing would be held if requested by either party.
Sanctions: The new rules now expressly authorize an arbitrator to impose "appropriate sanctions" to enforce the arbitrator's orders and the AAA rules.
Arbitral appeals: Some consumer arbitration agreements provide for an appeal to a three-arbitrator panel under some circumstances. The AAA's Consumer rules now expressly permit such appeals, so long as the appellate procedure complies with the Consumer Due Process Protocol and the AAA's consumer arbitration fee schedule applies.

Mass arbitrations

Many commenters (including us) urged the AAA to amend its Mass Arbitration Supplementary Rules and fee schedules to guard against further abuses of the arbitration process. We explained that plaintiffs' lawyers who threaten mass arbitrations seek to leverage the AAA's current procedures and fee schedules to coerce settlements—often regardless of the merits of the underlying claims.

Because of the coercive nature of threatened mass arbitration, few arbitrations that are part of a group of threatened mass arbitrations actually proceed to a final award. Last month, the AAA reported that, in 2024, 92 consumer and employment mass arbitrations consisting of 280,349 total cases were filed, and that arbitrators issued awards resolving 73 consumer cases and 51 employee cases—about 1% of the 9,681 mass arbitration cases that the AAA resolved in 2024. These data show that, like in mass-torts litigation in court, few cases ultimately result in a final hearing on the merits.

Unfortunately, the AAA chose not to amend its mass arbitration rules despite this empirical reality. In a statement on its website, the AAA indicated that it is "not currently considering revisions" to "the Mass Arbitration Supplementary Rules. If we decide to revise the rules in the future, we may request public comment at that time."

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This Mayer Brown article provides information and comments on legal issues and developments of interest. The foregoing is not a comprehensive treatment of the subject matter covered and is not intended to provide legal advice. Readers should seek specific legal advice before taking any action with respect to the matters discussed herein.

Archis Parasharami

Kevin Ranlett

Daniel E. Jones

Mayer Brown

71 S. Wacker Dr.

Chicago, IL 60606 United States

Tel.: +1 312 7820600

E-mail: Mnoonan@mayerbrown.com

URL: www.mayerbrown.com/

Attorneys: Archis Parasharami, Kevin Ranlett and Daniel E. Jones (Mayer Brown).

ExpertInsights: ExpertInsights Arbitration Labor