Get hired, sign a contract, and say goodbye to your rights. Mandatory arbitration in employment that resolves disputes favors companies over employees or customers.
That’s because the company usually chooses the arbitrator, and the arbitrator tends to side with the company. The process also requires employees and customers to waive rights to seek justice in court, according to the National Association of Consumer Advocates.
How arbitration works
Arbitration is seen as a means of deciding disputes by avoiding a court battle. Two parties present their arguments to an arbitrator or a panel of arbitrators. The arbitrator weighs the arguments and issues a determination that stands as the resolution of the dispute.
Arbitration may be voluntary or mandatory. The problem for workers and customers is that mandatory arbitration is becoming the rule in various kinds of agreements and contracts.
These include such pacts used for employment, insurance, home-building, car loans and leases, credit cards, retirement and investment accounts and nursing facilities.
Language about mandatory arbitration generally is hard to spot in contract paperwork. Many people never notice the arbitration clause in the terms of contracts or agreements.
The language of mandatory arbitration in employment locks the worker into only one option for resolving all disputes or problems. Contracts typically identify the arbitration company that must be used, and it’s the one that the company prefers.
How mandatory arbitration hurts workers
Companies want workers and customers to surrender their rights to go to court because they have the advantages in arbitration. Mandatory arbitration in employment lets companies evade accountability: In “forced arbitration,” as the process also is known, the arbitrator’s decision is binding, and the results are not public.
To address the problems prompted by mandatory arbitration in employment, specialists urge that workers and customers read contracts in detail. Try to negotiate the clause into voluntary, instead of mandatory, arbitration.
Ultimately, legislation would need to be established to ban mandatory arbitration in order to protect workers’ legal rights and consumers’ rights when buying products.
Other ways that mandatory arbitration in employment hurts workers include the following:
- Arbitrators aren’t bound by law and legal precedent in making decisions.
- There’s no appeal or public review of decisions.
- In agreeing to mandatory arbitration in employment, workers surrender the rights to sue in cases of discrimination, harassment, abuse and wrongful termination, rendering laws like the Civil Rights Act and the Equal Pay Act meaningless.
- Consumers lose their right to hold companies accountable because agreeing to mandatory arbitration means they cannot sue for negligence, defective products or scams.
Mandatory arbitration in employment favors companies, who win more frequently than workers or customers, especially if companies use the same arbitrators repeatedly, according to an analysis in The Washington Post.
Employees also receive less money in terms of damages in arbitration than in litigation. Also, workers usually must pay their way to attend arbitration hearings, sometimes traveling thousands of miles, a cost more easily absorbed by a company.
There is hope. In the face of public criticism, prominent companies like Google and Facebook have discontinued mandatory arbitration requirements for sexual harassment claims, according to The Washington Post analysis.
Contact Nilges Draher LLC employment law attorneys today for help in cases of mandatory arbitration in employment.