The Federal Arbitration Act or FAA, is an act of Congress that provides for non-judicial facilitation of private dispute resolution through arbitration. 1. Validity of arbitration agreement.The United States' brief observed that under the Supreme. A statute enacted in 1925 that provides the basic legal principles applicable to arbitration in the US (9 USC §§ 1-16; 9 USC §§ 201-208; 9 USC §§ 301-307). In short, yes, the Federal Arbitration Act does apply to employment contracts. Employmentrelated arbitration agreements have, under the Federal Arbitration Act (FAA), long been considered generally enforceable. The Federal Arbitration Act has, since 1925, established a federal policy favoring arbitration. The Federal Arbitration Act, or FAA, was passed in 1925 in response to a variety of court decisions that held arbitration agreements unenforceable. Background on the Federal Arbitration Act.