A large and growing number of employers across the United States require current and prospective employees to sign away core constitutional rights as a condition of getting a job. “If you want to work here,” millions of employees are told, “you have to agree that any disputes you have with us–even if we cheat you, even if we break our contract or break the Fair Labor Standards Act or a basic civil rights act–will be submitted to binding arbitration with an arbitrator who is chosen by an arbitration company whom we pick. If you don’t like it, you can’t work here.
These provisions are common. Big Box retailers have them, restaurants have them, companies like Halliburton have them, and many more. Exact numbers are hard to come by, but it’s clear that today there are far more workers in America who have been required to sign mandatory arbitration clauses than there are workers who are members of unions. If one were trying to figure out whether the balance of power had shifted one way or the other between employers and employees, it would be hard to find a more obvious measure. A smaller and smaller percentage of American workers have been able to organize into groups to balance out the power of employers, and a larger and larger percentage of American workers have been forced to give up their legal rights and submit to corporate-chosen, largely non-transparent tribunals whose decisions are not meaningfully reviewed by any court. What a deal!
Arbitration tends to work pretty well in the collective bargaining process, where both sides–the union and the employer–are pretty sophisticated “repeat players,” and where neither party dominates who selects the arbitrators. Arbitration between employers and individual employees tends to be a very different situation, though. While individual employees rarely know how a given arbitrator has ruled in past cases (the arbitrations are generally confidential, and thus secret), the employers know who’s who. Arbitrators who rule for an employee risk being blackballed, and never working as an arbitrator again.
As a lawyer who represents employees and consumers in an adversary process, I’ve learned to be suspicious when the party who is adverse to–against–my client says it’s doing something for my client’s good. Thus, I’ve always taken it with a grain of salt when big corporations say things to the effect of “the reason we’re choosing to force our employers to submit to arbitration is because arbitration is fairer and better for the employees.” It reminds me of the line in Caddyshack where the Judge self-righteously tells the caddy “I’ve sent boys younger than you to the electric chair. I didn’t want to do it; I felt I owed it to them.”
Thus it should be no surprise that the leading academic study of thousands of publicly reported employment cases has found conclusively that non-unionized employees who have to take their disputes to pre-dispute binding arbitration win less frequently than if they could have taken their cases to court. The same study found that in those cases where employees do win in arbitration, they tend to win smaller awards than they would have been likely to win in court. (See Alexander Colvin, Empirical Research on Employment Arbitration: Clarity Amidst the Sound and Fury?, Employee Rights and Employment Policy Journal, Vol. 11, No. 2 (2007). (Purchase the article.) There are some studies paid for by the Chamber of Commerce that purport to show how employees benefit from mandatory arbitration (some by carefully selecting the cases they study, some by blurring together data from arbitration in the collective bargaining setting and the non-unionized setting, and some by simply lying), but the Colvin piece is the real deal.
The U.S. Supreme Court has repeatedly said that a cornerstone of arbitration is that it’s voluntary, and consensual. The Court sees nothing involuntary about telling a long-time employee that they have to sign a binding arbitration clause or lose their job. “After all,” the argument runs, “they could always choose to work for someone else.” This argument is pretty empty for most employees. It’s only a short step from that to saying that someone who signs an arbitration clause at gunpoint has made a voluntary choice – “hey, they could have chosen to be shot.”
The legislative history of the Federal Arbitration Act makes very clear that this state of affairs is not what Congress intended in 1924. From talking to my clients, there are a large and growing number of people who feel that mandatory arbitration for employees is unfair, and that Congress needs to do something to correct the problem.
About the Author: F. Paul Bland, Jr. is a Staff Attorney for Public Justice (formerly Trial Lawyers for Public Justice), where he handles precedent-setting complex civil litigation. He has argued or co-argued and won more than twenty reported decisions from federal and state courts across the nation, including cases in four federal Circuit Courts of Appeal and six state high courts. He was named the “Vern Countryman” Award winner in 2006 by the National Consumer Law Center, which “honors the accomplishments of an exceptional consumer attorney who, through the practice of consumer law, has contributed significantly to the well being of vulnerable consumers.” He is a co-author of a book entitled Consumer Arbitration Agreements: Enforceability and Other Issues, and numerous articles. For three years, he was a co-chair of the National Association of Consumer Advocates. He also has won the San Francisco Trial Lawyer of the Year in 2002 and Maryland Trial Lawyer of the Year in 2001. Prior to coming to Public Justice, he was a plaintiffs’ class action and libel defense attorney in Baltimore. In the late 1980s, he was Chief Nominations Counsel to the U.S. Senate Judiciary Committee. He graduated from Harvard Law School in 1986, and Georgetown University in 1983.