On Tuesday, April 9, 2024, I was fortunate enough to accompany our client Joanne Grace to provide testimony before the United States Senate Committee on the Judiciary regarding the problems cause by forced arbitration. (See: Video, News Coverage). Grace, along with Gretchen Carlson and Professor Myriam Gilles of Benjamin N. Cardozo School of Law, Yeshiva University, testified in favor of banning arbitration in a variety of contexts, including in cases involving age discrimination and race/color discrimination in the workplace.
Just last Congress, in a bipartisan effort, fully supported by the American Association for Justice, President Biden signed into law The Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act. In doing so, both parties recognized that sexual harassment victims were being further victimized by employers when their claims were blocked from the court system and pushed involuntarily into arbitration. The same reasons that support protecting survivors of sexual assault and sexual harassment support broadening these protections to the victims of other unlawful discrimination and harassment in the workplace.
Forced arbitration, in the context of employment, poses significant disadvantages for employees. This practice requires employees to resolve disputes with their employers through a private arbitration process designed by the employer rather than through the public court system.
Why is forced arbitration bad for employees?
Forced arbitration presents a myriad of disadvantages for employees:
- Power Imbalance: Arbitration heavily favors employers, who often possess greater resources and expertise in navigating the process, leading to biased outcomes. Employer have experience in arbitration as well as access to law firms that specialize in handling arbitration to address employment disputes. Employers attempt to further expand on this imbalance by telling employees that unlike litigation, no attorneys are needed. The legal requirements of the claims are the same in court and in arbitration. Thus,
- Limited Discovery: The process of gathering evidence in arbitration is typically more restricted than in litigation, putting employees at a disadvantage by limiting their access to crucial information to support their case. By limiting discovery, forced arbitration makes it harder for employees to gather the necessary information to prove their claims. Additionally, with out the threat of court enforcement, employees lack an effective way to subpoena documents and witness testimony from third parties. For example, a former employee or manager who does not what to get involved, may skip appearing at an arbitration without consequence, but can be forced to appear at a deposition or trial by court subpoena.
- Potential Bias: Employers choose the arbitration system and the pool of arbitrators. Because the arbitration companies know that they are selling their services to the party that picks them, these companies make the system attractive to the employers. Part of making the system more attractive to employers is filling the pool of arbitrators with an overwhelming majority of defense attorneys. The arbitration provider will provide the parties a choice of five arbitrators and then let each party strike two from the list. When only one or maybe two arbitrators are current or former plaintiff-side lawyers, they will always be stricken – leaving only a remaining defense-oriented attorney as the arbitrator. Moreover, the vast majority of arbitrators are white and/or male.
- The Rules of Civil Procedure Don’t Apply: The rules of civil procedure provide a framework for conducting legal proceedings in a consistent and equitable manner, ensuring that all parties have access to due process and fundamental rights. The absence of the rules of civil procedure in arbitration undermines the fairness and transparency of the process for several reasons. Without these rules, arbitration proceedings may lack clear guidelines and standards, potentially leading to confusion, inconsistency, and unfair treatment of participants. Without these mechanisms, arbitration proceedings may become more cumbersome, time-consuming, and prone to delays, further disadvantaging parties, especially those with fewer resources.
- The Rules of Evidence Don’t Apply: The purpose of the rules of evidence is to ensure that only reliable and relevant information is presented during legal proceedings, promoting fairness, accuracy, and consistency in the adjudication of disputes. Without clear rules governing the admissibility and presentation of evidence, arbitrators may apply subjective standards or vary in their interpretation of what constitutes admissible evidence. This inconsistency can lead to unequal treatment of parties and undermine the fairness of the arbitration process. The absence of rules governing evidence may create opportunities for parties to manipulate or distort information to their advantage, undermining the integrity of the arbitration process. Parties may attempt to introduce irrelevant or prejudicial evidence, engage in tactics to suppress or discredit opposing evidence, or otherwise seek to influence the outcome unfairly.
- Much Smaller Awards: Studies have consistently shown that arbitration awards are significantly lower than those decided by juries, with averages ranging from 60 to 85 percent less, diminishing the potential compensation for employees.
- Confidentiality: Arbitration proceedings are typically private and confidential, shielding employers from public scrutiny and preventing employees from publicly highlighting workplace issues or sharing their experiences, which could hinder efforts to address systemic problems. This means that employers can more freely lie or present fake evidence in arbitration because no one outside the arbitration will ever see or be able to question it. This confidentiality further allows employers to keep the perpetrators in power positions because no one knows what they have done.
- Lack of a Public Record: Court systems have public dockets. Arbitration do not. Public docket systems are searchable on the internet and allows subsequent victims to investigate and discover if a pattern of conduct exists. Further, public dockets will allow anyone access to filed deposition transcripts to be used in subsequent cases of discrimination and harassment. This prevents a manager or HR representative about testifying about a particular company policy or procedure in one case and then changing that testimony in the next case to fit a new narrative that is more advantageous to the employer.
- Lack of Redemption: While public terminations or court judgments offer employees a sense of vindication, arbitration findings remain confidential, denying employees public recognition and allowing employers to control the narrative surrounding their termination. Thus, even when employees win in arbitration, the public perception remains that they were fired, and employees are unable to point to a judgment in their favor. The collateral is that where early victims cannot share their victories, it promotes the silencing of the discrimination and harassment victims that follow.
- Lack of Real Consequences: Because arbitration outcomes are confidential, employers face little public or internal pressure to address misconduct, hindering efforts to protect employees and prevent future wrongdoing. Many employees have the singular goal of “not letting what happen to me happen to others.” Arbitration stops that goal right from the start.
- Limited Appeal Options: Arbitration decisions are typically final and binding, offering limited opportunities for appeal, which can be problematic if errors are made, or important evidence is overlooked. This is particularly troublesome when potentially bias arbitrators know that their decisions will neither face review by a court of appeal nor be published and thus, open to public scrutiny.
- Lack of Precedent: Unlike court decisions, arbitration rulings do not create legal precedents, depriving employees of the opportunity to contribute to the development of legal principles that could benefit others facing similar issues.
- Waiver of Class Actions: Many arbitration agreements prohibit employees from participating in class-action lawsuits, diminishing their collective bargaining power, and preventing them from joining forces with others who may have similar claims.
- Harder to Hire Attorneys: Many attorneys know the above problems caused by forced arbitration and will not take cases that are blocked from court. (Spitz will take these cases and fight for your rights!) But where employers make it harder for employees to hire attorneys, they stack the deck even further against employees.
Faced with these inherent disadvantages, many employees will simply give up, drop their claims, and go away. This is really what the employers want.
Best Employees’ Rights Lawyer Blogs on Point:
- Arbitration Agreements Are Bad For Employees
- How Are Work Arbitration Agreements Enforced?
- Am I Stuck With An Arbitration Agreement?
How do employers justify forced arbitration?
In defense of arbitration, employers often argue that it is cheaper, easier, and faster. Well, when you prevent full discovery and limit the arbitration to a single day or two versus being able to present a few weeks of evidence – it is easier and faster – in the same way it is easier and faster to jump off the roof of skyscraper rather than take the stairs. But the steps – the process – is what makes court proceedings fair.
Moreover, arbitrations are actually more expensive than trial. Employers, on average, will spend an extra $150,000 in arbitration on the cost of the arbitrator to buy the benefits of a rigged system and confidentiality that prevents any type of significant changes.
At the conclusion of the hearing Senator Dick Durbin, the Chair of the Judiciary Committee, astutely pointed out that if arbitration is as great for the employee as employers claim, there would be no need for employers to force employees into it. If it is so great for the employees, give the employees the choice and they would choose it. Employers’ steadfast insistence on denying choice impeaches every argument employers assert to support forced arbitration.
Best Employment Discrimination Attorney Blogs on Point:
- Employers Will Try Everything To Get Into Arbitration
- Myth Busted: Arbitration Not Cheaper Than Litigation
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