Erosion of Employee Rights: Arbitration Agreements

In October 2016, the Philadelphia Inquirer ran an article titled, “Employer vs. Employee: The Battle over Arbitration” Arbitration agreements are becoming more prevalent for employees at all wage levels and at all levels, whether or not they occupy white-collar or blue-collar positions. Many times, employers make their employees’ submission to an arbitration agreement a condition of employment. That is, if you want to work there, you have to agree to arbitrate any claims that might arise under your employment there. Refusing to sign an arbitration agreement could jeopardize your job. For prospective employees, an employer can rescind an employment offer for refusal to sign the arbitration agreement. For existing at-will employees, an employer can terminate the employee who refuses to sign one.

In the employment setting, an arbitration agreement is a binding agreement between the employer and the employee which obligates both parties to settle employment disputes outside of the court system. In an arbitration agreement, the employee waives his/her right to file a lawsuit over employment-related matters. The agreement “must reflect that an employee has agreed clearly and unambiguously to arbitrate the disputed claim.” The arbitration agreement typically provides that the arbitrator’s decision and the award will be binding and reviewable only upon certain limited grounds. Arbitration is essentially a private justice system. There are no judges. And, importantly, there are no juries.

There are a number of reasons why employers are making their employees sign arbitration agreements. Many employers claim that arbitration costs less than litigating employment disputes. Some employers also claim that the arbitration system is more efficient and fair. But, are employers really looking out for their employees? The reality is that, in arbitration, employees prevail less frequently and recover less money than they do in courtroom trials.

Unlike litigation, arbitration does not provide any public records. The arbitration meeting itself is private. There is no publication of arbitrated cases like there is with court filings, and the media does not have any access to the outcome. And, usually, the results of the arbitration are confidential. Employers typically are not suing their employees. Rather, it is the other way around. Employees are most often the party that raises the claims – that the employer engaged in discriminatory conduct such as disability discrimination, racial discrimination, pregnancy discrimination, or other wrongful employment action. With arbitration, because of the confidentiality provisions, the public won’t learn about the employer's conduct. Mandatory arbitration can prevent employees from learning about similar instances of conduct within their workplace and can also prevent employees from learning about any similar concerns held by other employees. The New York Times published an article about the sexual harassment claim of former news anchor Gretchen Carlson, in her suit against Roger Ailes, the head of Fox News. That article was titled, “Gretchen Carlson’s Fox News Contract Could Shroud Her Case in Secrecy.” The widespread use of arbitration means that corporate misconduct will continue, outside of a courtroom, and instead, behind closed doors.

Have you signed away your right to sue?

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