Employers may be reluctant to admit that their policies are designed to shut workers out of our civil justice system. But there is no denying their intent.
Consider this example. Elizabeth is a widow with five children who came into my office this spring. Since the death of her husband a few years ago, she immersed herself in her work to provide for her family. Elizabeth didn’t earn much at her job, but her work as a waitress was enough to support her children. She had been working for a California-based restaurant chain for nine years.
During a Friday shift last year, Elizabeth was informed about a new kind of company policy – an arbitration agreement that she was told she had to sign and return by Monday. Elizabeth tried to find an attorney over the weekend to explain the document to her, and when she couldn’t, she asked her employer for more time to review the agreement. She was fired a few days later for missing the 72-hour deadline. The company also fired several other employees for either declining to sign the arbitration agreement or not doing so by the company-imposed deadline.
Elizabeth’s case is not uncommon, but it underscores just how much “free choice” goes into these “agreements.” Remarkably, courts have held that terminating employees for not signing employer-mandated arbitration agreements is not illegal. These and other decisions are beginning to reach their absurd conclusions, where courts enforce arbitration agreements without regard to the rights of the affected individuals, enforcement of our laws, or the administration of justice. As Judge Jack Zouhary (a George W. Bush appointee) recently wrote in an order compelling arbitration of an antitrust claim, “This Court is bound by case law’s pro arbitration bent … common sense plays no role.”
Compulsory private arbitration has been the favored corporate practice for years. It is easy to understand why. Highly-paid private arbitrators, whose livelihood often depends on the repeat business from the same large corporations, render “justice” to an aggrieved employee who almost certainly will never appear before them again. The inherent disadvantage for low wage workers facing off against multi-million dollar corporate employers in any setting is obvious, but the disadvantage is compounded in an arbitral forum. Despite this, our courts have generally enforced these “agreements.”
I often see aggrieved employees who have signed arbitration agreements without understanding the content or the significance of the document. They sign the documents that their employers put in front of them, in order to continue working and to feed their families. In fact, most workers don’t learn what the term “arbitration” means until they consult with an attorney and learn that they have already signed away their right to seek justice in a court.
But the compulsory nature of these arbitration agreements is undeniable when we look at the employees that don’t blindly “agree” to an employer’s mandatory arbitration policy, or those like Elizabeth who merely ask for time to conduct a careful review and to consider their rights before agreeing to sign them away. If there was any question whether such “agreements” are a condition of employment, Elizabeth’s experience offers the answer.
Are we beginning to see the end to these extreme practices? On July 31, President Obama signed an executive order prohibiting certain federal contractors from forcing their employees out of court and into arbitration in workplace discrimination cases.
Although this executive action is a step in the right direction, it does not go far enough. Congress continues to ignore this systematic denial of justice to our workers by failing to move forward on the Arbitration Fairness Act, which has been pending since last year. The Act would ban forced arbitrations in employment and consumer settings. Until workers have a real choice in deciding where to claim their rights, the scales of justice will remain unbalanced.