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FAIR Act Will Help Enforce Workers’ Rights and Ability to Join Together and Fight Back Against Employer and Corporate Wrongdoing

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The National Employment Law Project (NELP) applaudsCongressman Hank Johnson, along with 155 cosponsors, for introducing the Forced Arbitration Injustice Repeal (FAIR) Act of 2021. The FAIR Act would end corporations’ imposition of forced arbitration and class/collective action waivers in employment and civil rights cases, restoring the rights of workers to seek accountability from their employers for wage theft, racial discrimination, sexual harassment, and other wrongdoing. More than 60 million private-sector, nonunion workers who experience workplace violations like sexual harassment, racial discrimination, and wage theft are subject to forced arbitration and cannot bring their claims before a judge and jury, with Black workers (59.1%), women workers (57.6%), and low-paid workers (64.5%) the most impacted.

Corporations’ forced arbitration requirements and class/collective action waivers undermine compliance with employment laws that were designed by Congress to protect workers. Workers have power in the collective, and their ability to join together to fight back against their employers in court is a key workplace right that helps level the playing field when workers are harmed by powerful corporations. In fact, studies suggest that 98% of workers subject to forced arbitration do not actually bring their claim to arbitration at all, allowing corporations to effectively avoid liability entirely. Ending these one-way forced arbitration and class/collective action waivers that companies impose as a condition of getting and keeping a job is a critical economic justice and civil rights issue that Congress must address to ensure that all workers—and particularly Black, Latinx, and other workers of color—can reap the benefits of the laws Congress has passed to protect them.

The FAIR Act will push more employers to properly comply with existing federal and state wage-and-hour and discrimination laws by increasing the likelihood that companies will be held accountable for violations. The FAIR Act will also ensure that workers are empowered to enforce any future rights enacted by Congress, including but not limited to the right to a $15 minimum wage.

The FAIR Act is a racial and gender justice issue because labor market inequities and workplace violations fall most heavily on women, Black workers, and other workers of color. Forced arbitration and class/collective action waivers block workers from challenging these inequities and violations collectively before judges and juries, impacting women, Black workers, and other workers of color the most.

The proposed Raise the Wage Act provides a timely example of why passing the FAIR Act and ensuring workers can enforce any future rights matters for racial and gender justice. Occupational segregation has pushed far too many workers of color, and women in particular, into underpaid jobs and those in tip-earning industries. The FAIR Act will ensure that these workers are able to realize the promise of a higher minimum wage— helping decrease racial and gender wealth gaps—with Black women workers benefitting the most. The FAIR Act will also ensure workers can collectively challenge persistent sexual harassment and racial discrimination in the workplace.

NELP further applauds the U.S. House Judiciary Committee and Congressman David Cicilline for holding a subcommittee hearing today on the need to end forced arbitration.

Members of Congress should make clear to their constituents that they stand on the side of workers’ power to come together—and against wage theft and discrimination—by supporting the FAIR Act.

Background on Forced Arbitration and Class/Collective Action Waivers

  • Companies increasingly impose arbitration on U.S. workers as a condition of employment, denying them the right to enforce their rights before a judge and jury when their employer breaks the law.
  • More than 60 million private-sector, nonunion workers who experience workplace violations like sexual harassment, racial discrimination, and wage theft currently cannot bring their claims before a judge and jury, including 64.5% of workers earning less than $13/hour because of their employers’ required waivers.
  • Black workers (59.1%) and women workers (57.6%) are the most likely to be subject to forced arbitration.
  • Making matters worse, employers’ class/collective action waivers routinely incorporated into forced arbitration requirements prevent workers from banding together with their colleagues to challenge employer lawbreaking, whether in court or in arbitration.
  • By 2024, it is projected that more than 80% of private-sector nonunion workers will be subject to forced arbitration and class/collective action waivers–meaning that unless policies like the FAIR Act are put in place to protect peoples’ rights, the vast majority of private-sector workers will be unable to enforce their rights under state and federal employment laws before judges and juries.
  • Employers’ forced arbitration provisions don’t just channel claims to another forum – they suppress those claims. Faced with the reality of proceeding alone against their employer in a stacked forum, 98% of workers whose claims are subject to forced arbitration abandon their claims.
  • For those few workers who do go to arbitration, they lose more often than before judges and juries. Even if they win, their recoveries are significantly lower than if a judge and jury heard their case. And because arbitrators are in business (unlike judges), they want to earn repeat business—meaning that repeat players (large corporations that use forced arbitration) have huge advantages over individual employees who are unlikely to need the services of an arbitrator again.
  • Forced arbitration substantively harms workers by depriving them of their rights to recover stolen wages. NELP recently foundthat in 2019, $12.6 billion in wages was stolen from 6.25 million private-sector non-union workers earning less than $13 an hour who are subject to forced arbitration. Employers using forced arbitration requirements have effectively prevented these workers from ever recovering their stolen wages.
  • Forced arbitration proceedings are generally conducted in secret and behind closed doors. Forced arbitration clauses also regularly incorporate confidentiality or non-disclosure requirements that prevent workers from speaking up about their claims to other workers or the public.
  • Even if an arbitrator’s findings of fact or conclusions of law are flatly wrong, their decisions are virtually impossible to appeal. Arbitrators aren’t even required to issue a written decision explaining their conclusions. And because arbitration awards are typically strictly confidential, workers cannot even shine sunlight on arbitrators’ mistakes or their employers’ violations.
  • During the last Congress, the FAIR Act passed the U.S. House of Representatives in September 2019 with bipartisan support.

This blog originally appeared at NELP on February 11, 2021. Reprinted with permission.

About the Author: National Employment Law Project is a non-partisan, not-for-profit organization that conducts research and advocates on issues affecting underpaid and unemployed workers. 

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Big corporations suck the marrow out of the COVID-19 economy, leaving devastation behind them

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What’s the use of a crisis if big corporations and wealthy people can’t use it to make more money, preferably at the expense of those with less than them? I ask you! 

Well, by that standard, the coronavirus pandemic has worked out quite well. A large majority of the biggest publicly traded companies were profitable between April and September, but more than half laid off workers. Meanwhile, they watched small business revenue crash and many small businesses go under.

According to a Washington Post analysis, it breaks down like this: “45 of the 50 most valuable publicly traded U.S. companies turned a profit,” with an average of 2% revenue growth through the first nine months of the year. But at least 27 of those 50 firms had layoffs, leading to more than 100,000 people losing their jobs.

At the same time, small business revenue dropped 12%, with at least 100,000 small businesses closing.

To add insult to injury for the workers laid off by these large, profitable companies, many entered the pandemic with rah rah rhetoric about protecting their workers. Salesforce CEO Marc Benioff pledged “not to conduct any significant lay offs over the next 90 days.” He kept that promise. But about two months after that 90 days was up, Salesforce laid off 1,000 workers despite big profits.

This is 21st century corporate capitalism in action. Every disaster is an opportunity for more profit, and responsibility to the workers that make your company run is a meaningless concept. It’s one more reminder that claims about corporate tax cuts—like the ones the Republicans passed in 2017—meaning job creation should never, ever be believed. The tax cuts and the pandemic alike saw companies doing huge share buybacks to benefit the already wealthy, while workers reaped no benefit to speak of.

This blog originally appeared at Daily Kos on December 16, 2020. Reprinted with permission.

About the Author: Laura Clawson has been a contributing editor since December 2006. Clawson has been full-time staff since 2011, and is currently assistant managing editor at the Daily Kos.

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Forced Arbitration Protects Sexual Predators and Corporate Wrongdoing

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Fox News.  Sterling Jewelers.  Wells Fargo. 

What do they all have in common?  For years, they successfully kept corporate wrongdoing secret, through forced arbitration.

Buried in the fine print of employment contracts and consumer agreements, forced arbitration clauses prohibit you from going to court to enforce your rights.  Instead, employees who experience harassment and discrimination, or consumers who are the victims of financial fraud or illegal fees, are sent to a private arbitration forum.  Frequently designed, chosen, and paid for by the employer or corporation, in arbitration everything is conducted in secret. People who suffered the same abuses often can’t join together to show how rampant a problem is and confront a powerful adversary—and people are less likely to come forward at all, because they have no idea they aren’t alone.

When Gretchen Carlson sought her day in court over sexual harassment allegations against Roger Ailes, her former boss at Fox News, Mr. Ailes’s lawyers had a quick response: send the case to forced arbitration.  After she filed suit, he also invoked a clause that reportedly required absolute secrecy: “all filings, evidence and testimony connected with arbitration, and all relevant allegations and events leading up to the arbitration, shall be held in strict confidence.” It was only because she resisted that clause through a creative legal theory that her allegations were made public—unleashing a tsunami of claims of sexual harassment by Ailes and others at Fox News.

Hundreds and maybe thousands of former employees of Sterling Jewelers, the multibillion-dollar conglomerate behind Jared the Galleria of Jewelry and Kay Jewelers, known for advertising slogans such as “Every kiss begins with Kay,” were allegedly groped, demeaned, and urged to sexually cater to their bosses to stay employed.  The evidence of apparent rampant sexual assault was kept secret for years from other survivors and the general public through gag orders imposed in forced arbitration.

The same thing happened at American Apparel, where employees and models were forced to arbitrate sexual harassment claims and keep the details secret, and the proceedings were reportedly a sham.

We don’t yet know if Hollywood producer Harvey Weinstein used forced arbitration to suppress allegations of his decades-long campaign of sexually harassing, abusing, and assaulting young assistants, temps, employees and executives at the Weinstein Company and Miramax.  But the clauses may well have played a role, and his nondisclosure agreements and secret one-by-one settlements worked to the same effect.

And forced arbitration clauses do not only hide wrongdoing in sexual harassment cases.  Corporations also use forced arbitration to isolate victims and cover up massive, widespread wrongdoing in the financial sector.

For example, forced arbitration clauses found in legitimate customer accounts let Wells Fargo block lawsuits related to the 3.5 million sham accounts it opened; as a result it kept its massive scandal secret for years, and then lied to Congress about it.  People began trying to sue Wells Fargo in 2013, but cases were pushed out of our public courts into secret arbitrations, and Wells Fargo continued creating fake accounts.

KeyBank, like Wells Fargo, has also used forced arbitration to keep disputes secret and block relief for people charged overdraft fees when their accounts weren’t overdrawn.  A court recently ruled “unconscionable” KeyBank’s provision requiring a customer to “keep confidential any decision of an arbitrator.”  But the court allowed KeyBank to force the plaintiff to arbitrate his case individually, despite the fact that thousands or millions of KeyBank customers were subject to the same abuses. These customers were not permitted to come together to challenge these abuses as a group in court, because of forced arbitration.

By imposing secrecy and isolating victims, forced arbitration shields corporate wrongdoing and leaves it more difficult for those harmed to hold the wrongdoers accountable.  That’s why the Consumer Financial Protection Bureau issued a rule earlier this year prohibiting banks, payday lenders and other financial companies from using forced arbitration to cover up widespread frauds, scams and abuses.  This is a first step in the right direction of restoring Americans’ rights to challenge predatory practices.  But some in Congress have threatened to block this important protection. 

Earlier this year, Congress and President Trump overturned rules that prohibited employers with federal contracts from forcing employees to arbitrate sexual harassment or sexual assault claims, or claims alleging discrimination on the basis of sex, race, or religion.  In so doing, they took power away from women facing sexual harassment and returned it to those trying desperately to keep that harassment under wraps.

We cannot tolerate another blow against Americans seeking to hold the wealthy and powerful accountable.  The CFPB’s rule must be permitted to go forward. 

This blog was originally published at Public Citizen Litigation Group’s Consumer Law & Policy Blog on October 23, 2017. Reprinted with permission. 

About the Author: Emily Martin is General Counsel and Vice President for Workplace Justice at the National Women’s Law Center. She oversees the Center’s advocacy, policy, and education efforts to ensure fair treatment and equal opportunity for women at work and to achieve the workplace standards that allow all women to achieve and succeed, with a particular focus on the obstacles that confront women in low-wage jobs and women of color.

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