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Forced Arbitration Ban Good Start, But More Needs to Be Done

July 28, 2022, 8:00 AM

Forced arbitration affects an estimated 60 million working Americans each year, who as part of accepting a job, must accept fine print that takes any legal dispute out of a public courtroom and into a private arbitration setting where the company sets the rules. The company not only gets to set the fees an employee must pay, but also who will decide the dispute, where the arbitration will take place, confidentiality provisions, and all the other rules of the proceeding.

Unsurprisingly, corporations nearly always win.

According to the American Association for Justice, in years past, consumers were more likely to be struck by lightning than win a monetary award in forced arbitration. In 2020, just 577 Americans won a monetary award in forced arbitration, a win rate of 4.1%—below the five-year-average win rate of 5.3%.

President Biden in March signed the Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act of 2021 bill into law, which prohibits employers from forcing their workers into arbitration for allegations of sexual assault or sexual harassment..

Sexual Harassment

More than one in three women claim they have experienced sexual harassment at work, and under forced arbitration, those who have committed these offenses could hide in the shadows, knowing the claims would never see the light of day. That is why this new law is such an incredible achievement for workers, by forcing the perpetrator into an actual courtroom with a judge and a jury of their peers. Forced arbitration robbed survivors of their ability to obtain real justice for far too long, and ending its use is a vital step forward for survivors of sexual assault and sexual harassment.

However, the law’s passage has had the unfortunate effect of highlighting the many people who are “left behind” and similarly will need a legislative fix in order to have a real chance to obtain justice when subjected to forced arbitration.

For example, while a worker who is sexually harassed can now access the courts, another worker who is subjected to racial discrimination will often be shuffled into a secret, forced arbitration tribunal (and undoubtedly lose). The same applies to discrimination based on gender, disability, or other protected statuses.

The cruelty of the situation is underscored by a circumstance in which an employee is terminated solely based on the fact that they are pregnant. An employer under the law could force this dispute into their private arbitration system. However, if the employee is also subjected to sexual harassment, they can bring those claims in court. The disparity is nonsensical.

None of this discounts the tremendous impact this new law will have on workers, but should also embolden advocates to strive for more change that will greater balance the power dynamic between employees and employers and ensure acts of discrimination can no longer hide in the shadows.

Legislative Fix Needed

Legislating is difficult, and a long road awaits to further ban the use of forced arbitration. But the attention drawn to the perils of forced arbitration has given power to consumers and employees in other ways.

For example, more Americans know to look out for these clauses, and when possible, strike them before signing the contract (although many are provided on a “take-it-or-leave-it” basis). Also, corporations will continue to use forced arbitration clauses and imply that all claims are subject to them, even though it will not be enforceable for cases of sexual harassment and assault. It is important that people know their rights and can access the courts they now have a full legal right to access.

Advocates need to work together, using social media and any other tool available, to get the word out on how this historic law gives a voice back to survivors and a path to justice no longer confined under the binds of forced arbitration. This may be the first law of its kind for forced arbitration, but to truly be considered a victory for justice, it must not be the last.

This article does not necessarily reflect the opinion of The Bureau of National Affairs, Inc., the publisher of Bloomberg Law and Bloomberg Tax, or its owners.

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Michelle Simpson Tuegel has represented sexual abuse and assault survivors in high-profile cases such as the Larry Nassar litigation against the US Olympic Committee, Michigan State University, and USA Gymnastics; sexual assault survivors at the University of Southern California; female students in Title IX lawsuits around the country; and clergy abuse survivors nationwide.