March 07, 2022

By Kalpana Kotagal and Brendan Schneiderman

When Glenda Perez, a former representative at the health care giant Cigna Corp., told her human resources department that she had been discriminated against, she was fired.

When she tried to file a lawsuit for racial discrimination and illegal retaliation, she learned she could not bring her claim in court, but would instead have to proceed in mandatory arbitration, a process workers' rights advocates call forced arbitration.

In that process, her case was quickly dismissed by the arbitrator, who was a friend of Cigna's lawyer. The arbitrator denied Perez access to evidence to which she likely would have had access in a courtroom, and which was necessary to prove her case.

At every turn, Perez faced nearly insurmountable roadblocks to justice that seemed designed to favor her employer. Unfortunately, her experience is not unusual.

Forced arbitration occurs when employers dictate to employees that any future disputes that arise between the two will be resolved in private settings, where questions are decided by people often hand-selected by the employer.

More often than not, appeals are not allowed, and employees can't discuss the existence of the dispute or its results, even when a finding of employer misconduct is made. Today, forced arbitration is depressingly common in workplaces: According to a 2017 Economic Policy Institute report, as many as 60 million American workers are subjected to it.

On March 3, President Joe Biden signed the Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act, known as H.R. 4445, which bans employers from wielding forced arbitration against workers who are sexually harassed or assaulted. Instead, these workers are free to litigate their claims publicly in court.

Another bill, introduced in the U.S. House of Representatives, would go even further. The Forced Arbitration Injustice Repeal, or FAIR, Act would ban forced arbitration for any employer, consumer, antitrust or civil rights dispute — including those covered in H.R. 4445.

Specifically, the FAIR Act would deem any predispute arbitration contract — meaning a contract binding on both parties before any disputes have actually arisen — to be invalid and unenforceable "with respect to an employment dispute, consumer dispute, antitrust dispute, or civil rights dispute." Because the FAIR Act only bans predispute arbitration contracts, parties would still be free to agree to arbitration once the actual issue has arisen.

As civil rights lawyers, we are intimately familiar with the grave harms that forced arbitration inflicts on sexual assault survivors and other employees seeking justice. And H.R. 4445 is an important step for protecting American survivors of sexual misconduct from those harms. But H.R. 4445 doesn't go far enough, because it won't help people like Perez.

Because H.R. 4445 does not ban forced arbitration for all employment-related disputes, it will not help workers recover wages that have been unfairly withheld. For example, according to a 2017 Economic Policy Institute study by David Cooper and Teresa Kroeger, employers steal $15 billion every year from minimum-wage workers alone, through practices like unrecorded overtime.

Because H.R. 4445 does not ban forced arbitration for all forms of sex discrimination, it will not help women who are systematically underpaid because of their gender. White women earn only 79% of what white men earn, and Black and Hispanic women earn even less.

A common and incredibly destructive provision in many forced arbitration clauses is what's known as a joint action ban, which forbids workers from banding together to hold employers accountable for harmful policies or practices.

These bans weaponize a divide-and-conquer approach, forcing workers to proceed individually rather than sharing the cost of attorneys, filing fees, expert witnesses and other expenses, often rendering the claims too expensive to pursue. In a 2018 North Carolina Law Review article, labor and employment law scholar Cynthia Estlund estimated that forced arbitration deters — that is, prevents workers from filing at all — as much as 99% of employment claims.

In other words, joint action bans allow employers to get away with alleged illegal conduct by stifling valid legal claims and preventing workers from combating systemic mistreatment together. In fact, because of the secretive nature of arbitration, workers often don't even know others are being mistreated.

Individual arbitration disputes can drag on for years and, when eventually decided, usually result in smaller awards and lower win percentages than workers would get in court.

Here, too, H.R. 4445 offers helpful but narrow relief. In addition to invalidating predispute arbitration agreements, H.R. 4445 also prohibits predispute joint action bans.

But, again, because the law only focuses on sexual assault and harassment claims, that relief is not available to workers bringing other types of claims who are also being subjected to corporate divide-and-conquer tactics. Victims of wage theft, gender discrimination and racism in the workplace will still be forced to go it alone in their pursuit of justice.

To be clear, we applaud Biden for signing H.R. 4445. The law moves some of the worst abuses of power from secretive conference rooms to public courthouses. But it simply does not go far enough to root out this harmful practice or give workers and consumers the power to win meaningful justice when they have been mistreated. Congress has more options and must remain adamant that H.R. 4445 alone is not enough.

If Congress is serious about fixing forced arbitration, it must pass the FAIR Act.

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