Forced arbitration clauses in employment agreements should be unconstitutional. They deprive the employee the right to a jury trial if a dispute arises with the employer. We have the right to a trial by a jury of our peers, and yet, in far too many workplaces, if you object to anything, you cannot file a lawsuit. Work problem? You must arbitrate. Arbitration overwhelmingly inures to the benefit of employers.
It is estimated that 60 million Americans have forced arbitration clauses in their employment contracts. Eighty percent of the county’s biggest companies use them.
Now, about two weeks ago, the Attorney General of every U.S. State and every U.S. Territory banded together and urged Congress to end forced arbitration in workplace sexual harassment cases. Hopefully, Congress will take heed and pass federal legislation giving victims of sexual harassment access to the judicial system. As it exists now, victims are limited in an overwhelming number of cases to going to a closed hearing where an untrained arbitrator decides if there was abuse.
Financial matters are obviously very important. Forced arbitration is a roadblock to justice if this type of dispute arises out of employment. Changes must be made.
Congress must eliminate forced arbitration in employment sexual abuse matters
The compelling nature of sexual abuse matters is so clear that steps must be taken to afford a fair and unbiased road to justice for victims. Invasions and assaults of a sexual nature, by acknowledgement of the sheer number, and by the collective national outcry from every quarter, have taken this issue and catapulted it past the voices about eliminating forced arbitration for financial matters. To be assaulted, harassed, intimidated, groped, subjected to other forms of abuse, and certainly, to be physically violated, for these wrongs, arbitration should never have been and should not ever be the path to redress.
The A.G.’s letter to Congress said, among other things:
Specifically, we seek to ensure these victms’ access to the courts, so that
they may pursue justice and obtain appropriate relief from the impediment
of arbitration requirements… decades of private arbitration proceedings
regarding sexual harassment have had (the) … consequence of protecting
Victims of such serious misconduct should not be constrained to pursue relief
from decision makers who are not trained as judges, are not qualified to act
as courts of law, and are not positioned to ensure that such victims are
accorded both procedural and substantive due process.
Businesses with integrity, and not
Businesses with integrity will change their policies, even if a law does not follow from the AGs’ letter. Almost all companies require employees to sign Arbitration Agreements on a “take-it-or-leave-it” basis, both as a condition of employment and as a basis for continuing employment. The employer has the advantage almost always over an employee who needs to get the job or to continue working.
Microsoft, last December, announced it is abandoning forced arbitration for women employees with sexual harassment claims. They said that most of their employment contracts no longer had these forced arbitration clauses, but that such clauses did apply to a “small segment of our employee population.”
Some commentators suggest smaller companies may not follow Microsoft’s lead, primarily because their bottom line is more important to them than doing the right thing.
Sterling Jewelers, the conglomerate multi-billion dollar owner of Jared and Kay Jewelers (where every kiss begins with Kay) has hundreds, perhaps thousands of former employees that were allegedly groped, demeaned and urged to cater sexually to their bosses to stay employed. Arbitration rules kept this secret for years.
American Apparel also forced its models and female employees into arbitration, and details were also kept secret for years from other survivors and the general public.
According to the U.S. Department of Labor, there are nearly 75 million women in the workforce. A study from the Equal Employment Opportunity Commission (EEOC) indicates an astounding 40 percent of them have experienced unwanted sexual attention or outright coercion at work. The same study also found that approximately 75 percent of workplace sexual abuse goes unreported.
Arbitration is not fair
- The business chooses the location for the hearing. This can be an immediate obstacle for the consumer. Paypal requires consumers to arbitrate in California no matter where they live or what resources they have to pay for travel.
- The business picks the arbitrator. Sometimes, the business allows the employee to pick an arbitrator from a list the business provides. But the chosen arbitrator is still clearly financially beholden to the business for supplying that business. Ruling against the business would likely result in an end to the repeat business gravy train.
- The business can change the rules mid-stream if it chooses, such as by canceling the agreement with the employer or allowing or disallowing certain types of evidence. This is akin to moving the goalposts closer in a football game when you are on offense, and moving them further when you are on defense.
- Employees, who are at an extreme financial disadvantage compared to the business, must pay all their own costs, and they do not get to recoup these expenses even if they win. This often forces abandoning the thought of fighting.
Arbitration fosters secrecy
An important element of the civil justice system is its key role in uncovering information that shows misconduct, negligence and wrongdoing. Arbitration allows cover-ups.
This secrecy problem is hiding in plain sight and is outrageous. Arbitration groups like the American Arbitration Association (AAA) own millions of dollars in the shares of companies that are also their clients. Corporations have also paid millions directly in “memberships” and arbitration contracts. Conflict of interest, you say? Exactly.
In one study conducted, banking company First USA paid an arbitration group, NAF, several million dollars in fees to arbitrate more than 50,000 collection cases. The bank won 99.6 percent of the cases.
Thank you Attorneys General, and thank you Gretchen Carlson, who fought and fought around the arbitration clause in her contract to sue Roger Ailes.
Bipartisan unity here will become you Congress.