Buried in the Fine Print: Forced Arbitration

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By Caroline Fredrickson, Economic Policy Institute

From First Lady Michelle Obama’s speech in New Hampshire to accusations by Fox News’ Gretchen Carlson against Roger Ailes, sexual harassment and sexual assault have been dominating the headlines for months.

Also in the news has been the topic of forced arbitration agreements that limit victims’ ability to have their day in court. Very much a part of the Wells Fargo scandal has been the bank’s argument that it shouldn’t have to face its clients at trial.

These two stories actually have more in common than is often mentioned. First, of course, Fox tried to shut down Carlson’s suit by saying her contract’s arbitration clause prevented her from using that public forum. Few realize how common it is for women and men who allege harassment at work to be shunted into a secretive process that often prioritizes the interests of the employer.

As I described in my book, Under the Bus: How Working Women Are Being Run Over, while many Americans may think that they can always bring a lawsuit if their employer violates the law, for almost a third of nonunion workers (or approximately 36 million people) that is no longer true. Using a new weapon to undermine workers’ rights, more and more companies are forcing prospective and current employees to sign away their right to sue in order to get hired or to avoid being fired and to agree that all disputes will be resolved in private arbitration, rather than in normal courts.

For a growing share of employees, the protections in the Civil Rights Act of 1964 and other landmark laws belong in the history books, not the workplace. As Paul Bland points out in a new ACS publication, “far too often, access to justice in America has become something that is available to corporations and the very well heeled, and has become out of reach for many other Americans.”

Business groups defend arbitration as a better, less costly and less adversarial option. Considering that corporations are repeat customers in this arena while individual employees rarely are, the arbitrator certainly has an incentive to favor the boss over the worker. Held at a place of the employer’s choosing, arbitration is shielded from the public eye, with no record and no meaningful opportunity for a losing employee to appeal, even if the arbitrator’s interpretation of the law is incorrect or blatantly unfair. Research published by the Economic Policy Institute underlines the ease of winning the game when your team controls the umpires.

Women employees’ experiences at the retail store, American Apparel, provide an extreme example of the danger of arbitration clauses. The chief executive, Dov Charney, was a serial sexual harasser who was able to cover up his misconduct for a decade because his staff had all signed agreements not to sue, keeping it secret from the public, investors and his board, thus preventing these women from having a real remedy. Multiple women brought suit, challenging the arbitration clauses as biased toward the company and most lost, including one woman who said that she had been forced to be Charney’s “sex slave.”

Reporter Steven Davidoff Solomon asked, “If American Apparel and Mr. Charney had been subject to public lawsuits, how long could Mr. Charney have lasted? After all, there were five suits in the space of a few months in 2011 alone. And those are the claims we know about.” Charney was a CEO who bragged to a reporter that “masturbation in front of women is underrated.”

Charney and Ailes are not the only bosses who have been able to hide their harassing behavior by forcing their victims to pursue remedies out of the public eye. At a time when women and men in the military, the media and elsewhere have been courageously coming forward to describe their experiences, we need to ensure that real remedies and not just rhetoric provide them with some measure of justice.

Originally posted here.

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