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UNDERSTANDING THE FALL OF FORCED ARBITRATION
MEANING
- Forced arbitration which is also known as mandatory arbitration, prohibits workers from suing an employer in case of employment disputes. In the event of a dispute with the corporation, forced arbitration requires the consumer or an employee to go to a private arbitration forum designed by the corporation the dispute is against instead of the court.
- Forced arbitration is not much common outside the US and it is included as a part of the employment agreement.
- It was introduced in order to reduce the burden on courts by solving employment disputes amicably.
THE REAL ISSUE
- The policies are framed so as to benefit the employer. It is common sense that companies are more likely to win in arbitration than if a case is taken to state or federal court. Arbitrators are not required to explain how they came to their final conclusion in a written document and appeal against such decisions is hardly possible.
- That often leaves the most exploited workers like those who are black, low-wage, female, all of whom face a higher incidence of sexual harassment at a vulnerable place.
- In February 2019, Google ditched mandatory arbitration clauses from its employee agreements. The MeToo movement has gained momentum placing the issue of employee rights firmly on the agenda and raised red flags over the misuse of non-disclosure agreements (NDAs).
- According to a recent survey conducted by the Economic Policy Institute, more than half of private-sector employers have mandatory arbitration procedures. Among private-sector employees, 56.2 percent are subject to mandatory employment arbitration procedures. This means that more than 60 million employees no longer have access to the courts in the event they have employment disputes.
WHY IS FORCED ARBITRATION BAD?
- For a variety of reasons, forced arbitration is harmful to employees. Forced arbitration deprives the workers of their right to access the court system. The deprivation of that access without being able to make a voluntary choice to surrender that right is a significant loss.
- The court system is relatively free from the influence of the employer - protection often not provided in forced arbitration. The court system is also open to public scrutiny and its decisions can be appealed. In employment cases, presenting the case becomes difficult for the employee, since the information needed to prove your case is in your employer's hands.
- Lastly, the costs associated with forced arbitration are much higher than that of the public court system, but evidence also states that employees who are governed by forced arbitration rarely file claims. This enables employers violating employee protection laws to continue to do so without being held accountable for their actions.
MEASURES AGAINST FORCED ARBITRATION
The U.S. House of Representatives has passed the “Forced Arbitration Injustice Repeal Act” (FAIR Act) which aims to nullify mandatory arbitration agreements and class-action waivers for employment, consumer protection, antitrust and civil rights matters.
The FAIR Act aims to protect employees’ and consumers’ rights to pursue claims in court by:
- Prohibiting arbitration agreements that mandate arbitration of future employment claims and other matters
- Prohibiting agreements that interfere with the rights of individuals, workers, and small businesses to participate in a joint, class, or collective action related to employment, consumer, antitrust or civil rights dispute.
WHAT CAN YOU DO?
Today it is difficult to find any company where the forced arbitration clause is not provided. Most people find it difficult to notice this clause in their agreement. However, in order to be protected against mandatory arbitration, one read the agreement properly and make an informed decision after understanding the implications of all the clauses. Try finding alternatives or negotiating this term of the agreement. Remember that in today's world, it is only you who can help yourselves.
- What is forced arbitration?
- Why is forced arbitration bad?
- Measures taken by the government
