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Legislators Fight Back on Forced Arbitration

On February 28, 2019, U.S. Representative Hank Johnson (D-GA) and U.S. Senator Richard Blumenthal (D-CT) introduced “The Forced Arbitration Injustice Repeal Act” (“FAIR Act”).  The FAIR Act would prohibit the nearly ubiquitous use of arbitration agreements that seek to force arbitration of as yet unforeseen disputes between business interests and individuals in the areas of employment, consumer, antitrust or civil rights.  Currently these agreements are used to preclude class action litigation by companies seeking to curtail the collective voice of those with whom they do business, or workers trying to secure their day in court on claims against their employers.  Arbitration clauses effectively sideline such actions, which often have the effect of curbing unlawful corporate behavior by bringing such behavior to light.  The FAIR Act would also prohibit agreements that interfere with the rights of individuals, workers, and small businesses to participate in a joint, class or other collective action related to an employment, consumer, antitrust or civil rights dispute.

The House bill has been referred to the House Judiciary Committee, where it is likely to receive active consideration. It has over 160 co-sponsors, and Lindsey Graham (R-SC) is among the Republican senators who support looking into correcting the overuse of arbitration.  The Senate bill currently has 33 co-sponsors, all Democrats.  Despite the support, Senate Majority Leader Mitch McConnell and his cohorts are likely going to allow the bill to die in committee.

What is Arbitration?

Arbitration is a private means to resolving court claims.  Rather than allowing you to present your case to a jury of your peers, your claims are heard before a private lawyer or retired judge, who is often hired repeatedly by the company pushing your claims into this process. This process essentially creates a conflict of interest, as the arbitrator’s fees are paid by the company.  In that situation, they may not want to find for the plaintiff to any extent that would cut off their source of income by incurring the employer’s displeasure. In a private arbitration, workers are often far less likely to prevail, and when they do, they tend to get a fraction of the monetary award they would likely have gotten from a jury.

Restoring Justice for Workers Act

It is expected that The Restoring Justice for Workers Act will be introduced in 2019 by Rep. Jerrold Nadler (D-NY). In the last Congress, it had 58 co-sponsors, all Democrats. The bill would prohibit mandatory pre-dispute arbitration in the employment context altogether. In addition, the bill would amend the National Labor Relations Act, and would prescribe relief set forth by the Civil Rights Act in civil actions. The theory is that every American worker has the right to his or her day in court.  To interfere with that right is unjust and serves no interest other than corporate greed.

The Lasting Effects of the #MeToo Movement

In a nationwide response to the #MeToo and #TimesUp movements by women who are demanding an end to sexual harassment and the practices that prevent harassers from being exposed to scrutiny, the Ending Forced Arbitration of Sexual Harassment Act likely will be re-introduced by Sen. Kristen Gillibrand (D-NY). It would prohibit mandatory pre-dispute arbitration of sex discrimination claims. It had bipartisan support in the last Congress.

The Takeaway

If enacted, these various pieces of legislation would begin to put right the harmful practice of employers’ preventing your day in court with the use of these one-sided forced arbitration tactics.  The FAIR Act would void all of the arbitration agreements currently used by employers against employees and independent contractors to keep their claims out of court and out of potential class actions. The Restoring Justice for Workers Act would prevent their use at all on a national level going forward. 

Arbitration agreements are often used to prevent small claim lawsuits which could cost companies a great deal of money if brought as a class action. When the agreements are enforced against such a claim, plaintiffs usually have to abandon the suit, as the cost of arbitrating on an individual basis is prohibitively expensive, and the potential recovery is too low for them to secure representation.

Vote Your Rights Back

While these bills would enact sweeping changes benefiting American workers, it appears that the Republican-controlled Senate will fight to protect corporate interests and to keep these bills from being taken up for a vote, much less signed into law.  Elections matter.

LAZEAR MACK LLP
436 14th Street, #1117
Oakland, CA 94612
510-735-6316

https://lazearmack.com/contact/

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