The term “forced arbitration” has been in the news a lot recently. At the end of 2017, Microsoft announced that it eliminate forced arbitration clauses from its employment agreements. Last week, ride-sharing companies Uber and Lyft made a similar move. If you’re in the dark about why the change matters, here’s the scoop.
Arbitration agreements typically state an employee does not have the right to bring a claim against his or her employer outside a private arbitration system. In other words, the employee waives his or her right to sue in public court. So, by taking these clauses out of agreements, company employees will be permitted to take sexual harassment cases to court rather than having no choice but to handle them privately.
Why Did Arbitration Even Start?
Arbitration was initially intended to provide an efficient method of ending disagreements out of court by having an unbiased arbitrator listen to both sides and make a decision. It modeled what the parties might expect in court. With forced arbitration, though, it’s rarely the fair process that it was originally intended to be. There are several issues with forced arbitration:
- Corporate control: The corporation can determine who the arbitrator will be, what the rules of arbitration are, what the location for arbitration will be, and how the arbitrator will be paid.
- Private proceedings: Arbitration, unlike litigation, is not guided by any legal protections and is a private process. There is no requirement for an arbitrator to be trained, and there are no grounds for public review of an arbitration decision.
- Legal protections are null: Remember the laws that protect Americans from discrimination based on sex, age, race, and disability? If the case goes to forced arbitration, those protections are non-existent.
- Prohibitive costs: Arbitration can be a costly process for consumers; it is often expensive enough to prevent consumers from taking action.
Although it has been considered a dispute resolution process, arbitration is often imposed as a condition of employment. No employee is legally required to accept an arbitration clause, but doing so is often a condition to being hired or receiving an employment-related benefit. That’s where the “forced” part comes in.
Immediately after Uber and Lyft announced their move to eliminate forced arbitration, many people were quick to point out that they’re not quite doing enough to protect victims. An article in the LA Times notes that the companies are still denying people the right to join others in class actions. They also continue to require people to arbitrate disputes that do not involve sexual assault or harassment.
They may not be perfect, but the changes are a step in the right direction. Hopefully, these actions by big businesses will gain momentum in affording victims the options they deserve to seek justice.
A West Point graduate where he served as captain and military aviator, John Bair continues his commitment to our country through his efforts within the settlement planning industry. He has represented families of victims lost in the Flight 3407 crash, offered pro bono services to the families of 9/11 victims and drafted the first consumer protection bill for plaintiffs (H.R. 3699).