mandatory arbitration

Editor’s Note: Nan Aron is the founder and president of Alliance for Justice. Celine McNicholas is director of government affairs at the Economic Policy Institute. The opinions expressed in this commentary are their own.

The Trump administration is advancing policies that further rig a system that’s already stacked against working people in America. There are few more powerful examples than the administration’s support of forced arbitration, a practice in which employers require workers to agree, as a condition of employment, to resolve all workplace disputes in arbitration. It robs workers of their right to take employers to court for all types of claims and forces workers into a process that overwhelmingly favors employers.

The use of forced arbitration has been growing for several decades. However, it has received long-overdue attention in recent years as more workers have spoken out about workplace harassment. Movements like #MeToo have helped shine a light on the sexual harassment many women experience every day on the job. Workers subject to forced arbitration are required to deal with sexual harassment, discrimination, and wage theft cases through settlements outside the courts — a secretive process where the arbitrator may be paid by the employer.

Among private-sector nonunion employees, 56.2% are subject to mandatory employment arbitration procedures. Extrapolating to the overall workforce, this means that 60.1 million American workers no longer have access to the courts to protect their legal employment rights and instead must go to arbitration. Nearly a third of forced arbitration agreements include class action waivers as well, meaning that workers also lose the right to join with their co-workers to enforce their rights.

What’s even more alarming is that by packing the courts with anti-worker judges, the Trump Administration is helping this form of employee abuse to grow. Neil Gorsuch and Brett Kavanaugh, Trump-appointed Supreme Court justices, have already strengthened forced arbitration. Gorsuch wrote the majority opinion in Epic Systems v. Lewis, which held that it was legal for companies to force employees — in this case, victims of wage theft — into individual arbitrations. Gorsuch and Kavanaugh both ruled to weaken employees’ rights in another arbitration case, Lamps Plus Inc., v. Varela. And lower federal courts are following Supreme Court precedent regarding forced arbitration, increasingly ruling in favor of companies over workers in allowing force arbitration.

In fact, a study by The Economic Policy Institute and the Center for Popular Democracy forecasts a major spike in corporations imposing forced arbitration on employees as a result of the changed legal climate. More than half of private-sector, non-union workers are subject to such agreements now — up from less than 8% in 1994. The study predicts that number will surge to more than 80% by 2024. And this will likely disproportionately impact women and African-American workers since forced arbitration is more common in industries dominated by women and African-American employees — further perpetuating economic injustice in these communities.

For employers, however, forced arbitration represents a boon to their balance sheets and a shield for their reputations. Workers usually lose in arbitration. And companies get to keep secrets as arbitration is not a public process like taking a case to court. Consider that widespread sexual harassment and discrimination at the Sterling mega-chain of jewelry stores was hidden for years because affected employees were silenced by arbitration and nondisclosure agreements. When the story finally came to light in a report from the New York Times, hundreds of women who had suffered similar abuse found out, belatedly, they were not alone.

Had the workers at Sterling been able to join together and take their case to court, their combined voices would have been heard. Not only could the company have been held accountable sooner, but other employees might have been spared abuse.

Forced arbitration takes direct aim at eliminating class-action lawsuits, which corporate interests oppose because they are such a powerful way for workers to hold employers accountable. Corporations have done everything in their power to portray class actions as a plague on the system, something to be wiped out.

But, in fact, the opposite is true; private collective legal action is, and always was, an integral and normal part of the enforcement framework for workers’ rights in this country. Recent cases bear this out: In 2017, Victoria’s Secret employees in California filed a class-action lawsuit against the company over unfair scheduling practices, that resulted in recovering a reported $12 million from the company in wages and helping to eliminate scheduling abuses for hundreds of thousands of other retail employees. Three thousand Tyson Foods workers successfully sued when they were not paid for the time it took to don and remove protective gear, changing company policy.

Better working conditions for employees have been won this way, incrementally and case by case, over decades.

We can’t sacrifice this progress. Congress must act. We hope that the Forced Arbitration Injustice Repeal Act introduced by Rep. Hank Johnson and Senator Richard Blumenthal, which would ban forced arbitration in consumer and workplace disputes passes the House this fall, and that the Senate then acts quickly. States also have options, including innovative whistleblower laws. California allows workers to sue employers on behalf of the state — and when employers are assessed penalties, the funds go toward enforcement of workplace standards. This right applies even to employees otherwise hamstrung by forced arbitration agreements.

The Trump Administration and its anti-worker judges are doing their best to turn back the clock on employees’ rights. Ending forced arbitration would score a victory for workers and against this administration’s harmful agenda.