Category Archives: Arbitration

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.

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…..


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.

Social context and employment lawsuit dispute resolution

Source: Richard Posthuma, Gabriela Flores, James B. Dworkin, Samuel Pavel, International Journal of Conflict Management, Volume 27 Issue 4, 2016
(subscription required)

From the abstract:
Purpose: Using an Institutional Theory perspective, we examined employment lawsuits across case type and alternative dispute resolution procedures (negotiation, trial, arbitration).

Design/methodology/approach: We examined actual data from U.S. Federal court lawsuits (N = 98,020). The data included the type of lawsuit, the dispute resolution method used, and the outcome of the lawsuit in terms of the dollar amounts awarded.

Findings: The results show employers winning more in high social context cases (Civil Rights) than in other cases (ERISA). In negotiated settlements, plaintiffs received similar amounts across case types. In trials and arbitrations, outcomes were higher than settlements across case types. In arbitrations, plaintiffs received less in high social context cases (NLRA) than in other (ERISA) cases.

Practical implications: The results show that employers lose more often and in larger dollar amounts in arbitration than in litigation. However, if arbitration rulings more closely matched to the likely outcomes of trials then subsequent litigation would be less likely to be overturned and transaction costs would be reduced. Then the arbitration of employment lawsuits would more closely match the arbitration of contractual grievances under the typical labor relations system where the arbitrator’s decision is usually final and binding. This could be a better outcome for all stakeholders in the dispute resolution process.

Originality/value: This is the first study of its kind to examine actual workplace conflicts that result in employment-related lawsuits from the perspective of social contextual factors.

Unions battle employers that use arbitration to curb worker rights

Source: Dominique Paul Noth, People’s World, August 25, 2016

….Employment agreements requiring employees to submit workplace claims to an arbitrator rather than utilizing the courts have become increasingly commonplace. It is a favored tactic in avoiding or lowering the cost of litigation and an attractive way to prevent workers from realizing what they’re giving up. This tactic also abates these companies’ biggest fear, a class or collective action that gives workers a bigger say in how they are treated.

The August 22 decision is not only a big blow against employers, it has also exposed to the air the hidden seven-eighths of their iceberg attack on worker rights.

Most everyone is familiar with the top eighth of the iceberg. This is the ferocious direct and public assault on union coffers and members through right to work (for less) laws in 25 states and legislation like Wisconsin Act 10 that takes bargaining rights away from state workers except for fire and police unions that have supported Gov. Scott Walker. The tone of the battle has become familiar.

But while the public and most unions were focused on the surface, worker rights have been chipped away through methods like arbitration agreements, supposed human resource companies, designations as individual contractors and other sophisticated litigious tools that unions tend not to fight because the victims are not usually union workers.

Not anymore. Today you will find that union leaders and representatives are very active in training these workers, who may never even become union members, on worker rights and how to retain/recover them. ….

Will the Supreme Court Agree with the NLRB that Pre-Dispute Employment Arbitration Provisions Containing Class and Collective Action Waivers in Both Judicial and Arbitral Forums Violate the National Labor Relations Act – Whether There is an Opt-Out or Not?

Source: Christine Neylon O’Brien, University of Pennsylvania Journal of Business Law, Vol. 19, accepted (Forthcoming), 2016

From the abstract:     
Should employers be able to require individual employees to sign away their rights to collective action as a condition of employment? The National Labor Relations Board has held in D.R. Horton and Murphy Oil USA that when employers require employees to waive their right to “joint, class, or collective claims addressing wages, hours, or other working conditions against the employer in any forum, arbitral or judicial” as a condition of employment, this violates the NLRA. Even allowing prospective employees to opt out of such class waivers does not cure the violation in the NLRB’s view according to its decision in On Assignment Staffing Services. A circuit split has developed on enforcement of the Board’s orders on the class waiver issue with the Fifth Circuit denying the NLRB enforcement, the Seventh affirming the Board, and the Eight Circuit joining the Fifth. There are several appellate cases pending before the Ninth Circuit which has yet to fully develop its stance and approximately sixty class waiver cases pending on appeal. The Supreme Court will likely be faced with deciding one of these appeals soon. This article discusses the NLRB’s and courts’ positions from several recent cases involving class waivers in individual employment dispute agreements. It suggests how the courts and the Supreme Court should rule as well as the possibility of legislative action.

Start-Ups Embrace Arbitration to Settle Workplace Disputes

Source: Jessica Silver-Greenberg and Michael Corkery, New York Times, May 14, 2016

….As once-plucky start-ups like WeWork grow — the company’s work force has swelled to 1,500 from 300 a year ago — they are taking a page from the playbook of big corporations, which are increasingly using arbitration to thwart employees from bringing any meaningful legal challenge in court, an investigation by The New York Times found last fall…..

Beware the Fine Print
Source: New York Times, 2015-2016

Examining how clauses buried in tens of millions of contracts have deprived Americans of one of their most fundamental constitutional rights: their day in court.

PART 1 Arbitration Everywhere, Stacking the Deck of Justice
OCT. 31, 2015

PART 2 In Arbitration, a ‘Privatization of the Justice System’
NOV. 1, 2015

PART 3 In Religious Arbitration, Scripture Is the Rule of Law
NOV. 2, 2015

Efforts to Rein In Arbitration Come Under Well-Financed Attack
NOV. 15, 2015

Bipartisan Bill Would Protect Service Members’ Right to Avoid Arbitration
NOV. 20, 2015

Arbitration Is Target of New Bill in Senate
FEB. 4, 2016

Pivotal Nursing Home Suit Raises a Simple Question: Who Signed the Contract?
FEB. 22, 2016

House Democrats Call for Curbs on Required Arbitration
APRIL 14, 2016

Rule on Arbitration Would Restore Right to Sue Banks
MAY 4, 2016

Who’s Afraid of Collective Action?

Source: Kelsey Bleiweiss, OnLabor blog, April 1, 2016

The law of the workplace is in the midst of a critical debate about collectivity.

In case after case courts and the National Labor Relations Board have fought over the availability of collective action in two areas relevant to workers: class actions and class arbitration. (Union rights and collective bargaining represent a third area, but the debate over this kind of collective action is beyond the scope of this post.) These forms of collective legal action have been considered legitimate legal tools at one point, so why has recent law undercut workers who band together to use those tools?

Illinois HB 580: The Political Battle Over Interest Arbitration

Source: Kelsey Bleiweiss, On Labor blog, March 23, 2016

When it comes to labor news in Illinois, most attention is on the Chicago Teachers Union and its likely strike in April. But HB 580, a labor bill pending in Illinois, merits attention as well, as it has ignited fierce debate in the state for over a year. Though the future of the bill is uncertain, it raises important questions about public sector unions that have little choice but to engage with partisan politics.