SEC-approved rules for handling employment discrimination claims in NASD arbitrations go into effect Jan. 18.
A year ago, the NASD eliminated mandatory arbitration of harassment and discrimination claims, leaving that choice up to employers. If firms do arbitrate these claims, the new rules make several changes to current practice. For example, arbitration panels will be composed of all public members, and employees will be able to depose witnesses.
The new rules also specifically allow recovery of attorneys' fees if available under the law. This provision is somewhat controversial since the NASD's existing arbitration code is silent on attorneys' fees--arbitrators are able to award any type of remedy. Laws in some states prohibit arbitrators from awarding attorneys' fees.
Finally, the new rules add U-4 disclosure language that informs employees they are giving up certain rights in agreeing to arbitrate.