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Arbitration Bill Moves through Rules Committee after Heavy Debate

Aug. 11, 2006 – A controversial bill designed to protect the rights of workers forced into signing arbitration agreements was unanimously approved by senators and forwarded onto the full Senate body for further consideration during a late night Rules Committee meeting held Friday on St. Croix.
The motion to approve the bill, brought forward by Sen. Juan Figueroa-Serville, came after more than four hours of heavy debate, along with a slew of insults and accusations generated by a large panel of business representatives, local attorneys and residents.
The arguments for and against the bill were varied – while some claimed that the measure is "unlawful" and "illegal," others said that it would protect the rights of local employees who are being "exploited and disenfranchised" by their employers.
At a Senate meeting held last month, Sen. Ronald E. Russell explained that bill primarily targets pre-employment "dispute resolution agreements" – or arbitration agreements – designed to "take away an employee's right to a fair jury trial" should one chose to sue one's employer for unfair labor practices.
Russell, the bill's sponsor, said arbitration agreements have become a standard for many local companies, which "force" workers into "waiving their rights in order to be hired" (See "Employees Arbitration Bill Moves through Committee").
He said the bill deems any agreement that waives a right guaranteed by the U.S. Constitution "unenforceable" unless it is entered into "willingly and knowingly" by the employee.
During Friday's meeting, however, some testifiers said that arbitration agreements are included in many contracts – from bank documents to leases to collective bargaining agreements. According to Charles Engeman, an attorney representing Wyatt V.I (a subcontractor with HOVENSA), the current bill would make many of these contracts unenforceable and would make it more "difficult and expensive" for residents to carry out various transactions.
He also said that V.I. residents are only guaranteed to "those fundamental rights provided for in the Constitution."
"And the right to a jury trial has not been found to be a fundamental right, so it is not a fundamental right for a citizen of the V.I. unless their claim is brought before a federal court – not the Superior Court in the Virgin Islands – and exceeds $20; therefore, this bill would not legally do anything," Engeman said.
Alex Moorhead, HOVENSA's vice president, added to Engeman's remarks by saying that the bill is "unlawful" because it violates the Federal Arbitration Act, which establishes national policy favoring arbitration in "private contractual relationships involving commerce."
Moorhead said that the right to execute pre-employment arbitration agreements has been upheld by the U.S. Supreme Court, and has been enforced by "all courts having jurisdiction over the Virgin Islands."
"They are federally favored," Moorhead said. "And this bill flies in the face of that."
Moorhead said this is the second time the Senate has tried to pass a bill rendering arbitration agreements unenforceable. "The first time was in 2002, and it was signed into law by the governor. However, that law was declared unenforceable and invalid by the District and Superior Courts. And if this bill is passed, it will suffer the same fate as the last one," he said.
Attorneys Lee J. Rohn and Pamela Colon painted a different picture, however, and told senators that the bill would help to stop discrimination in the workplace by "leveling the playing field" between employers and employees.
Rohn, who testified in support of the bill when it was first introduced last month, explained Friday that the arbitration issue is particularly a problem on St. Croix, where high unemployment rates are augmented by the fact that large companies do not allow residents to apply for a job unless they sign an arbitration agreement.
This practice, she said, has caused an increase in the number of discrimination, personal injury and toxic tort cases throughout the territory.
Colon, along with Glenn J. Smith, the V.I. Labor Department's labor relations director, said that arbitration agreements favor employers, do not allow for certain claims to be handled fairly, and are becoming commonplace throughout the community.
"At the rate its going, we won't have jury trials in the territory anymore," Colon said. "Arbitration agreements are only enforceable so far as it doesn't conflict with existing law, and it's the Senate's job to put that law into place so we can deal with this problem."
After hearing both arguments, Russell said he would be bringing forth an amendment that would streamline the bill's language and incorporate concerns brought up by testifiers. Since the amendment had not yet been drafted, however, he urged other senators to move the bill forward.
Voting in favor of the bill, along with Russell, were Sens. Pedro "Pete" Encarnacion, Juan Figueroa-Serville, Louis P. Hill and Terrence Nelson.
Sens. Lorraine L. Berry and Roosevelt C. David were absent.
In other news, senators also unanimously approved the Pesticide Control Act of 2006, along with the nominations of Frances Molloy and Carmelo Rivera to the St. Croix Hospital Board.
Senators will take a final vote on both the bills and the nominations at the next Legislative session, scheduled for later this month.

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