Category Archives: Arbitration

Workplace discrimination claims fare poorly in arbitration, study says

Source: Phil Ciciora – University of Illinois at Urbana-Champaign, phys.org, December 19, 2018

The use of arbitration to adjudicate worker complaints – and avoid costly litigation through the slow, unwieldy public court system – has been a controversial practice since its usage began to increase in the 1990s. And according to a new paper co-written by a University of Illinois expert in workplace dispute resolution, certain types of cases fare worse than other types that are resolved through arbitration.

Employee discrimination claims largely received worse outcomes in arbitration than other work-related disputes such as wrongful termination or breach of contract, says new research from J. Ryan Lamare, a professor of labor and employment relations at Illinois.

Following the passage of anti-discrimination laws such as Title VII of the 1964 Civil Rights Act, employees commonly adjudicated workplace claims through litigation. But over the past three decades, the U.S. Supreme Court has sought to expand the use of private arbitration as an alternate dispute-resolution mechanism, Lamare said…..

Related:
Resolving Discrimination Complaints in Employment Arbitration: An Analysis of the Experience in the Securities Industry
Source: J. Ryan Lamare, David B. Lipsky, ILR Review, Volume 72 Issue 1, January 2019
(subscription required)

From the abstract:
This article empirically examines whether employment discrimination claims differ from other types of disputes resolved through arbitration. Whether arbitration is appropriate for resolving violations of anti-discrimination statutes at work is a focus of ongoing policy debates. Yet empirical scholarship has rarely considered whether different types of complaints might have distinct characteristics and receive varied outcomes in arbitration. The authors analyze all of the employment arbitration awards for cases filed between 1991 and 2006 in the financial services industry to determine whether differences in the type of allegation affect award outcomes. They also examine the effects of the financial industry’s decision in 1999 to introduce voluntary arbitration for discrimination claims. Results indicate that discrimination claims largely fared worse in arbitration than did other statutory or non-statutory claims but that arbitration systems are capable of meaningful self-reform.

Lowe’s Is Making Managers Sign Arbitration Agreements If They Want Their Bonuses

Source: Dave Jamieson, Huffington Post, May 29, 2018

We’re going to see a whole lot more of these “voluntary” agreements after last week’s Supreme Court ruling.

Lowe’s has a message for its store managers: Sign this or else.

Salaried managers and assistant managers at the big-box home improvement retailer are being required to enter binding arbitration agreements under the threat of losing their valuable bonuses, according to a copy of the contract obtained by HuffPost.

By signing the contract, managers agree they won’t take Lowe’s to court with any claims or join in class-action lawsuits against the company. Instead, any grievance they have must be taken individually and in private to an arbitrator ― an arrangement that could significantly cut back workers’ legal claims of unpaid work. ….

Related:
The Supreme Court’s Arbitration Ruling Is Already Screwing Thousands Of Chipotle Workers
Source: Dave Jamieson, Huffington Post, May 27, 2018

The burrito chain has asked a court to exclude 2,814 workers from a massive wage theft lawsuit because they signed mandatory arbitration agreements.

Editorial: Forced arbitration hides workplace abuses. No one should forfeit rights for a job
Source: Sacramento Bee, May 24, 2018

Forced Arbitration
Source: Economic Policy Institute, 2017

Forced arbitration, especially where it prohibits the use of a class action of any kind, can be very destructive of employee rights, undermines labor standards, and contributes to wage suppression, discrimination, and poorer working conditions.

The Supreme Court Favors Forced Arbitration at the Expense of Workers’ Rights
Source: Galen Sherwin, ACLU Women’s Rights Project, May 22, 2018

The #MeToo movement has offered an important lesson on the collective power of voices joining together to take on individual experiences of injustice. On Monday, the Supreme Court dealt a huge blow to precisely this kind of collective power, ruling against the ability of workers to join together to take on employment discrimination and abuse.

The court ruled that employers are free to force workers who have been victims of unfair labor practices into private arbitration to address their claims — even in cases where workers sought to bring a collective legal action. The decision came in a case about failure to pay overtime, but its implications are far broader and extend to many of the claims of harassment and discrimination that have surfaced thanks to the #MeToo and #TimesUp movements…..

Consumer Arbitrations with The American Arbitration Association 2009 to Present

Source: Yale Law School Consumer Arbitration Data Archive, Last Updated: May 24, 2018

This website reposts data previously posted on the American Arbitration Association’s website: https://www.adr.org/consumer. The AAA describes the data on their website: “The AAA maintains an online Consumer Arbitration Statistics report based on consumer cases filed with the AAA for at least the last five years. This report is made available pursuant to state statutes such as the California Code of Civil Procedure §1281.96 and Maryland Commercial Law §§ 14-3901 to 3905 and updated quarterly, as required by law.”

In practice, each time the AAA adds the latest quarter of data, it takes down the earliest quarter. This website aids researchers by retaining the data each quarter in exactly the format in which it was originally posted. We are retaining and posting this data because we have found it useful in trying to understand the effect of mandates for consumers to arbitrate.

Caveats are in order. A first limitation of the data is the absence of access to the underlying materials, which are held privately. As the AAA explains, it does not independently verify what arbitrators report to it. A second problem is that coding errors can occur at both individual and aggregate levels. For example, when researching consumer arbitration between 2015 and 2016, we identified sixty-two cases in the set that were described as seeking the same amount ($607,525.40) and in which each consumer was listed as having received the same award ($585.71). AAA research staff responded to our inquiries, identified a computer coding error affecting these cases as well as other cases, and posted corrected data. But no red flags told other researchers that the data had been corrected. Thus, a vivid example of a potential error may be found through culling thousands of entries and then seeking clarification, but the general public has no systematic method of checking the accuracy of the data posted by AAA. ….

Another site that has usable AAA data is Level Playing Field (http://levelplayingfield.io), and there could be other sites as well. ….

Sexual Harassment Cases Go Uncounted as Complaint Process Goes Private

Source: Jeff Green, Bloomberg, April 23, 2018

Even as women have begun speaking out about sexual harassment at work, the number of official complaints to state and federal regulators hit a two-decade low in 2017.

The federal Equal Employment Opportunity Commission and its state-level counterparts received just over 9,600 complaints in 2017, according to data obtained by Bloomberg, down from more than 16,000 in 1997—a 41 percent drop.

The growing use of mandatory arbitration

Source: Alexander J.S. Colvin, Economic Policy Institute, April 6, 2018

Access to the courts is now barred for more than 60 million American workers.

This is an expanded version of a report originally published in September 2017. The report now includes data on mandatory arbitration by employer size, state, industry, gender, race, average employee wage, and typical employee education level.

From the summary:

In a trend driven by a series of Supreme Court decisions dating back to 1991, American employers are increasingly requiring their workers to sign mandatory arbitration agreements. Under such agreements, workers whose rights are violated—for example, through employment discrimination or sexual harassment—can’t pursue their claims in court but must submit to arbitration procedures that research shows overwhelmingly favor employers.

In reviewing the existing literature on the extent of this practice, I found that the share of workers subject to mandatory arbitration had clearly increased in the decade following the initial 1991 Court decision: by the early 2000s, the share of workers subject to mandatory arbitration had risen from just over 2 percent (in 1992) to almost a quarter of the workforce. However, more recent data were not available. In order to obtain current data for this study, I conducted a nationally representative survey of nonunion private-sector employers regarding their use of mandatory employment arbitration.

This study finds that since the early 2000s, the share of workers subject to mandatory arbitration has more than doubled and now exceeds 55 percent. This trend has weakened the position of workers whose rights are violated, barring access to the courts for all types of legal claims, including those based on Title VII of the Civil Rights Act, the Americans with Disabilities Act, the Family and Medical Leave Act, and the Fair Labor Standards Act.

The Supreme Court is currently considering a case challenging the inclusion of class action waivers in arbitration agreements. Class action waivers bar employees from participating in class action lawsuits to address widespread violations of workers’ rights in a workplace. The Court will rule on whether class action waivers are a violation of the National Labor Relations Act; their decision could have wide-reaching implications for workers’ rights going forward.

Related:
Press release

The growing use of mandatory arbitration: Access to the courts is now barred for more than 60 million

Source: Alexander J.S. Colvin, Economic Policy Institute, September 27, 2017

From the press release:
A new EPI paper by Cornell professor Alexander J.S. Colvin shows that more than half of private sector nonunion workers—or 60 million people—are subject to mandatory arbitration in employment contracts, which takes away their access to the court system that protects their legal employment rights. Mandatory arbitration agreements are used by employers to require employees, as a condition of employment, to agree to arbitrate legal disputes rather than being able to go to court. These agreements bar access to the courts for all types of legal claims, including those based on Title VII of the Civil Rights Act, the Americans with Disabilities Act, the Family and Medical Leave Act, and the Fair Labor Standards Act. In other words, when a worker is paid less than she is owed, is fired for being pregnant, or is underpaid because of her race, she cannot have her claim heard in a court of law—instead, she is locked into a process that favors the employer. This new data collected by Colvin in 2017, show that the number of companies requiring mandatory arbitration has increased from around 2 percent of workers in 1992 to more than half of workers in 2017…..

Related:
Summary

The Strong Do as They Can: How Employment Group-Action Waivers Alienate Employees

Source: Matthew B. Seipe, Labor & Employment Law Forum, Volume 7 Issue 1, Article 4, May 2017

If an employer steals a group of employees’ wages, those employees are free to file a group-action lawsuit at the local courthouse to recover those wages. However, by contractual agreement, some employers require their employees to individually arbitrate their employment claims. These agreements, what this article refers to as compulsory group-action waivers, support the view that “the strong do as they can, while the weak suffer what they must.” Here, the “strong” employer requires the employee to sign away her right to join co-workers and publicly sue the employer. The waiver makes the employee “weak” through alienation –a concept refined and examined by sociologists, psychologists, theologians, and philosophers –by decreasing the employee’s power, meaning, community, and self-actualization in the workplace and society.

Justice for Sale: How Corporations Use Forced Arbitration to Exploit Working families

Source: Kate Hamaji, Center for Popular Democracy, May 2017

From the summary:
Over the last several decades, corporations have designed a method to exploit working families by forcing them to sign away their legal rights—unwittingly and without alternative—as a condition of doing business with them. In forced arbitration, a company requires a worker or consumer to agree to resolve any potential claims against the company through a binding arbitration process. These “agreements” eliminate the right to sue in court, so that someone who experiences fraud, wage theft, or sexual harassment will face a private arbitrator rather than a judge. These pre-dispute arbitration clauses, which are often buried in the fine print of contracts, may also require individuals to waive their rights to participate in class or collective action lawsuits or to appeal an arbitrator’s decision. Most people are unaware that when they accept a job, make a purchase, or open a credit card, they could be forced into a system that is designed by and for corporations themselves—a system that results in costly fees for workers and consumers, rules in favor of businesses the overwhelming majority of the time, and erodes workers’ and consumers’ rights.