WASHINGTON, February 18, 2018: Forced arbitration clauses in employment agreements should be declared unconstitutional. They deprive the employee the right to a jury trial if a dispute should arise with the employer.
As Americans, we all have the right to a trial by a jury of our peers. Yet in far too many workplaces, if you object to anything, you cannot file a lawsuit. Work problem? You must arbitrate. But arbitration overwhelmingly benefits employers.
Some 60 million American employment contracts today include an arbitration clause. Eighty percent of the country’s biggest companies use them.
The Attorneys General of every American State and every U.S. Territory have banded together and are urging 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 things exist now, however, in an overwhelming number of cases, victims must attend arbitration 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 are necessary.
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 ensure justice for victims that is both fair and without bias.
Invasions and assaults of a sexual nature, by acknowledgment of their sheer number and by the collective national outcry from every quarter, have taken this issue and catapulted it past arguments 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 state A.G.s’ letter to Congress said, among other things:
“Specifically, we seek to ensure these victims’ 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 serial violators…
“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 as a result of the A.G.s’ 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. An employer almost always has the advantage over an employee who needs to obtain a job or to continue working for that employer.
Last December, Microsoft announced it is abandoning forced arbitration for women employees with sexual harassment claims. They said that most of their employment contracts no longer contained these forced arbitration clauses, though 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 multi-billion dollar conglomerate that owns Jared and Kay Jewelers, 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 forces its models and female employees into arbitration. Details about those meetings kept secret for years from other survivors and from the general public.
According to the U.S. Department of Labor (DOL), 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.
Forced 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 cancelling 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 even the thought of fighting.
Read also: Mandatory arbitration: License to Steal
Forced arbitration fosters secrecy
An important element of the civil justice system is its key role in uncovering misconduct, negligence, and wrongdoing. Forced arbitration permits cover-ups to occur.
This enforced 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.
Banking company First USA paid 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. Is that because they were in the right, or because they were writing the check for the arbitration proceedings?
For taking action on this vital issue, thank you state Attorneys General, and thank you Gretchen Carlson, who fought and fought around the arbitration clause in her employment contract to sue the late Roger Ailes.
Bipartisan unity in opposing forced arbitration in the workplace will become you, Congress.
About the author
Paul A. Samakow is an attorney in Maryland and Virginia, who has been practicing since 1980. He represents injury victims and routinely battles insurance companies and big businesses that will not accept full responsibility for the harms and losses they cause. He can be reached at any time by calling 703-761-4343, via email, or through his website.
His book “The 8 Critical Things Your Auto Accident Attorney Won’t Tell You” can be instantly downloaded, for free, on his website: http://www.samakowlaw.com/book.
Samakow has now also started a small business consulting firm. The website for this business is brand new and Mr. Samakow will be most appreciative of any and all comments. www.thebusinessanswer.com.