Outten & Golden: Empowering Employees in the Workplace

Posts Tagged ‘mandatory arbitration’

Meet the Senators Who Voted Against the Franken Amendment

Thursday, October 8th, 2009

I think that all homo sapiens can understand how the mere thought of an organization that receives government money through contract mechanisms being tangentially involved in setting up a fake tax shelter for a fake pimp and his fake prostitution ring of fake prostitutes can justifiably lead to lawmakers going absolutely cross-eyed with white-hot, impotent rage. But what happens when a similarly taxpayer-endowed contractor attempts to cover up employee-on-employee gang rape by locking up the victim in a shipping container without food and water and threatening her with reprisals if she report the incident? Somehow, it doesn’t engender the same level of anger!

Credit new Senator Al Franken however, for introducing an amendment to the Defense Appropriations bill that would punish contractors if they “restrict their employees from taking workplace sexual assault, battery and discrimination cases to court.” You’d think that this would be a no-brainer, actually, but that didn’t stop Jeff Sessions from labeling Franken’s effort a “political attack directed at Halliburton.” Franken, of course, pointed out that his amendment would apply broadly, to all contractors, because otherwise, ‘twould be a bill of attainder, right? Right?

Franken’s amendment ended up passing, 68-30. Here’s a list of the Senators who showed broad support for Roman Polanski by voting against it:

Alexander (R-TN)
Barrasso (R-WY)
Bond (R-MO)
Brownback (R-KS)
Bunning (R-KY)
Burr (R-NC)
Chambliss (R-GA)
Coburn (R-OK)
Cochran (R-MS)
Corker (R-TN)
Cornyn (R-TX)
Crapo (R-ID)
DeMint (R-SC)
Ensign (R-NV)
Enzi (R-WY)
Graham (R-SC)
Gregg (R-NH)
Inhofe (R-OK)
Isakson (R-GA)
Johanns (R-NE)
Kyl (R-AZ)
McCain (R-AZ)
McConnell (R-KY)
Risch (R-ID)
Roberts (R-KS)
Sessions (R-AL)
Shelby (R-AL)
Thune (R-SD)
Vitter (R-LA)
Wicker (R-MS)

ADDENDUM: It’s been pointed out to me that the U.S. Chamber of Commerce lobbied against the Franken amendment as well:

Republicans point out that the amendment was opposed by a host of business interests, including the U.S. Chamber of Commerce, and applies to a wide range of companies, including IBM and Boeing.

I guess we must cover up crimes like rape in order to save capitalism.

About the Author: Jason Linkins is a Political Reporter at the Huffington Post, covering media and politics. He’s based in Washington, DC. Previously, he wrote for HuffPo’s Eat The Press, and has also contributed to DCist and Wonkette.

This article originally appeared in The Huffington Post on September 7, 2009. Reprinted with permission from the author.

Why Does Chamber of Commerce Favor Arbitration for Workplace Rape Victims, But Oppose It for Union Workers?

Thursday, June 18th, 2009

Yesterday, the union movement ramped up its attacks on the Chamber of Commerce over its “two-faced” approach to the Employee Free Choice Act’s provision requiring arbitration if a business won’t bargain in good faith after a union’s been chosen by workers. As the AFL-CIO Now blog observed:

The latest Big Business tactic is to attack the provision of the Employee Free Choice Act that guarantees workers who form a union a fair first contract — a vital provision, because more than 50 percent of workers who form a union don’t have a contract after one year and more than a third still don’t have a contract after two years.

Corporations are crying about the possibility they might have to take part in arbitration with employees if they don’t reach a first contract after three months of talks — even though they’re enthusiastic about arbitration in a wide variety of circumstances where they have the advantage.

In a new ad running in key newspapers, American Rights at Work again challenges corporate hypocrisy on arbitration. When it’s a big corporate entity against an individual, as in credit card disputes or personal injury claims, corporate spokesgroups like the Chamber of Commerce say arbitration is a way to settle any sort of dispute “fairly, quickly and inexpensively.” But when it’s time to bargain over better wages and benefits for their workers, these same groups are viciously opposed to even the possibility of requesting arbitration.

To union activists, what’s especially galling is how fervently businesses embrace arbitration when it allows them to avoid being held accountable for negligence towards employees or the defrauding of consumers. As Stewart Acuff, the special assistant to the President of the AFL-CIO, observes, “It’s pretty simple: arbitration is fine for them when it keeps them out court and limits damages to business. They use it to settle credit card disputes, mortgage payment disputes, and whenever it limits businesses liability and negligence. But when they look at arbitration for workers, then all of it sudden they hate it when it’s simply used as an incentive to force good-faith bargaining, a last resort to allow workers to get a collective bargaining agreement.”

In contrast, business interests have so championed and abused little-known arbitration provisions to keep themselves from being sued that they’ve spurred new legislation pushed by the Fair Arbitration Now coalition designed to rein in their excesses. A few days ago, NPR featured the story of Jamie Lee Jones who was repeatedly raped by co-workers of Halliburton in Iraq but has been barred from suing the company because of an employer’s contract she signed preventing a lawsuit. As the NPR story noted:

Jones was escorted by security to the company clinic for a rape examination. When the rape kit examination was done, the evidence was turned over to Halliburton security. The young woman’s breasts were so badly mauled that she is permanently disfigured. It has been four years since the attack, and despite the physical and circumstantial evidence, the Department of Justice has declined to investigate.

Seeking Justice Through a Suit

Justice Department officials refused to explain or comment in any way to NPR about the case. Jones has decided that if she can’t have her day in criminal court, she’ll sue Halliburton and its former subsidiary, KBR, in civil court.

“I want corporate accountability,” she says. “I was so brutalized that I’m going to have to remember this the rest of my life. And Halliburton was so uncompassionate that they even let the men work there, still, after I went home.”

Heather Browne, director of communications at KBR, says that while the company can’t speak to the facts since the case is ongoing, it denies any liability in the attack. And she argues that any dispute with Jones, even one involving charges of rape, must go to arbitration.

So Jones is now going to court seeking the right to sue. She has become one of the nation’s leading arbitration reform advocates.

An Arbitration Culture

If Jones’ case is remarkable, the fact that arbitration is involved is not. In the past 20 years it has become a dominant feature in the legal relationship between American corporations, their employees and their customers.

If you use credit cards, have a cell phone contract, bought a house from a builder or put your mother or father in a nursing home, you have very likely signed away your right to be heard in court if there’s a problem. It’s called pre-dispute mandatory binding arbitration.

Public Citizen’s David Arkush, one of the country’s leading researchers on arbitration, says many consumers have no clue as to the rights they’re signing away.

“In the fine print of those contracts is a provision that says that they can never sue the company if they have a dispute,” Arkush says.” Instead they have to go a private, secret tribunal chosen by the company.”

To top it all off, businesses rig the arbitration process against consumers and employees by barring them from going to court if there’s any fraud or negligence before a dispute occurs, and only the company can choose the arbitrator.

The arbitration provision in the Employee Free Choice Act, on the other hand, only uses arbitration if negotiations between business and labor have broken down for 120 days after negotiations begin, and both businesses and the union must agree on their arbitrator from a vetted list of private arbitrators approved by a federal agency, the Federal Mediation and Conciliation Service.

All that makes the two different types of arbitration strikingly different: one is a business ruse used by businesses to deprive customers and workers of their rights, and the other is a bulwark designed to protect workers’ rights against bad-faith bargaining.

The new pro-labor ad attacking such hypocrisy, running in Capitol Hill political newspapers as negotiations in the Senate are heating up, puts the issue starkly:

Big Business is happy to support arbitration when it’s in their best interest. But when it comes to negotiating contracts with their workers, Big Business would rather use delay tactics to avoid paying better wages and benefits. It’s only fair that corporations agree to arbitration for workers who are trying to negotiate a first contract after forming a union. Arbitration is a key part of the Employee Free Choice Act that will let both sides reach a fair agreement.

One reason the Chamber and other Big Business interests are turning to attacking arbitration is that their previous bogus claims that the legislation takes away the right to a secret ballot have been exposed as a fraud on Capitol Hill. (The bill actually gives workers the choice — now determined by employers — of whether to form a union by majority sign-up or secret-ballot election.)

Of course, you don’t hear Newt Gingrich or the Chamber of Commerce championing the rights of on-the-job rape victims like Jamie Lee Jones to sue and avoid arbitration, indeed when it comes to abused employees or defrauded consumers they hail arbitration as the best way to handle any disputes. In fact, in May 2008, more than a dozen business trade groups wrote a letter to Congress stating, “Arbitration is an efficient, effective, and less expensive means of resolving disputes for consumers, employers, investors, employees and franchisees, in addition to the many businesses that use the same system to resolve business disputes.”

As the SEIU Blog sums up their attitude, “Corporate Lobbyists: We Were for Arbitration Before We Were Against It.” Among the paeans to the glories of arbitration offered by business leaders before they attacked its use in the Employee Free Choice Act:

“For more than 80 years, arbitration has helped Americans settle disputes fairly, quickly and inexpensively, without having to file a lawsuit or navigate the court system.” – Lisa Rickard, president of the US Chamber’s Institute for Legal Reform (4/2/08)
“Arbitration is mutually beneficial, which is what we have always thought.” – Arne Wagner, assistant general counsel for Bank of America [ABA Journal, December 1994]

“[F]ederal policy… favors the use of arbitration as an efficient, effective, and less expensive means of resolving disputes…Arbitration, has served as an essential valve for the nation’s overburdened civil justice system.” – Letter to Senate Judiciary Committee signed by US Chamber of Commerce, Retail Industry Leaders Association, National Retail Federation, National Association of Manufacturers, Jackson Lewis, et al (2/7/08)

Just a little bit of a double standard, no? Arbitration is the best thing ever when it comes to protecting their wallets, but when it comes to adding the safety net of first contract arbitration during collective bargaining, it’s the devil incarnate that must be stopped at all costs.

Despite such hosannas to arbitration, they’re not-so-surprisingly eager to denounce arbitration as a “mortal threat to American freedom” when workers want it after months of stalled labor negotiations.
And the research is now irrefutable that a majority of workers who select a union don’t get a contract in their first year as a result of business stalling tactics; if businesses can’t bust a union through illegal intimidation before an election, then they’ve got a second shot at union-busting by foot-dragging tactics and lowball proposals to slash wages and benefits by the company. As American Rights at Work reports:

One year after a successful union election, 52 percent of employers deny their workers a contract. According to Cornell University researcher Kate Bronfenbrenner, 52 percent of workplaces had no collective bargaining agreement one year after a successful union election. Two years after an election, 37 percent of workers’ unions still had no labor agreement.

It’s easy to determine when businesses will back or oppose arbitration: if it seems likely to screw workers and consumers out of their day in court, then they see it as good, and it if might possibly help workers achieve decent wages and benefits through labor negotiations, then it’s bad. As Paula Brantner, the attorney who heads the pro-worker Workplace Fairness advocacy organization, observed recently:

So if employers truly think that arbitration is a better system than resolving disputes in court, then why are they fighting the Employee Free Choice Act [EFCA] provision? You don’t have to be a cynic to realize that they’re inclined to fight any effort to level the playing field for workers, which the Employee Free Choice Act would do. Just as they’re spreading the myth that EFCA would eliminate the secret ballot, it just comes naturally for them to confuse the public about the other EFCA provisions that would empower workers.

But if corporate America doesn’t want “a bureaucrat from Washington” to tell people how to run their businesses, then we have to wonder why they want arbitrators who are not even required to know the law or follow it passing judgment on their employment practices. Essentially, companies are talking out of both sides of their mouth: they want to impose an unfair arbitration process on their employees, but cannot bear to have even a fair arbitration process applied to them.

But workers don’t have to accept this hypocrisy: we can work to support both the Arbitration Fairness Act and the Employee Free Choice Act. If both were to pass, workers would be able to go to court for their employment and civil rights claims (under the Arbitration Fairness Act), and leave arbitration to the unions and employers who know how to use it best (under EFCA). But that might simply be too much fairness for employers to handle.

And while the Chamber of Commerce and its GOP allies like Newt Gingrich have been painting a nightmarish scenario of jackbooted bureaucrats imposing job-killing arbitration concessions, the real truth of how arbitration works in labor negotiations has been ignored. As a new Roll Call column by two Harvard and MIT labor scholars, including Arnold Zack, the former past president of the National Academy of Arbitrators, points out:

Something is drastically wrong with a labor law when an employer can ignore and thwart the will of the majority of its employees.

The Employee Free Choice Act currently before Congress addresses this problem by assuring time for negotiations and mediation as the first step in the process and arbitration when agreement is blocked.

The bill has led to a misguided debate and mistaken information about the role played by arbitration in a well-designed and professionally administered dispute resolution system. This has made the current bill an easy target for opponents to argue that everyone will end up having a contract imposed by “government arbitrators” who know nothing about business or labor issues…

If passed, the Employee Free Choice Act would assign a mediator by the Federal Mediation and Conciliation Service as soon as a new unit is certified to support the negotiations by offering the full range of mediation, education, and facilitation services helping the parties reach a voluntary agreement. The vast majority of cases are likely to be resolved through negotiations and mediation.

In fact, settlements are reached more than 90 percent of the time in public sector jurisdictions that provide mediation prior to arbitration. So, contrary to those who argue every case will go to arbitration, the presence of arbitration encourages and enhances the ability of the parties to reach voluntary agreements in negotiation and mediation — and incidentally does so without imposing on employees or employers the risks and costs of a strike to get a contract.

After being smeared by hyperbolic distortions about the bill’s arbitration provision and research by the Chamber’s extremist libertarian scholar-for hire, Richard Epstein, the union movement is finally hitting back on this issue. The latest inside-the-Beltway barrage follows up on last week’s first round of attack ads against the Chamber’s “hypocrisy.” As a spokesman for American Rights at Work (ARAW) told The Hill newspaper this week:

“Labor law reform must ensure that workers who want to join a union are able to do so without facing endless delays from corporations seeking to deny them a voice in the workplace,” ARAW spokesman Josh Goldstein said. “Big Business’ position is hypocritical and motivated by their desire to maintain a status quo in which corporations make millions while middle class families struggle to get ahead.”

About the Author: Art Levine is a contributing editor of The Washington Monthly who has also written for The American Prospect, Alternet, In These Times, Salon, The New Republic, The Atlantic and numerous other publications. He’s written investigative articles on unionbusting and other corporate abuses, and recently completed Cornell University’s Strategic Corporate Research summer program. He blogs regularly for Huffington Post, and co-hosts a weekly Blog Talk Radio show, “The D’Antoni and Levine Show,” every Thursday at 5:30 p.m. ET.

This article originally appeared in The Huffington Post on June 17, 2009. Reprinted with permission by the Author.

10 Steps to Ending Forced Arbitration

Wednesday, May 6th, 2009
If you look close enough at an employment or credit card contract you’ll typically see some fine print sized like this that says something to the effect of, “By signing this contract both parties agree to submit to binding arbitration. Both parties acknowledge that if there is one or more disputed items that remain unresolved at the end of arbitration, the arbitrator will render a final and binding decision on those unresolved items and his/her decision will be written on a separate settlement agreement and shall be signed by both parties.” It might be confusing. But you might sign it anyway because you need the job, or you need the credit card.

Did you notice the part about “binding arbitration”? That’s the part of the contract where you loose your rights to a trial by judge and jury if a dispute arises between you and that company.

What about the 7th Amendment, you ask? Aren’t we all entitled to a trial by jury? Well, unfortunately binding arbitration, also known as mandatory arbitration or forced arbitration, is legal. No courts or typical rule of law are involved in making decisions through mandatory arbitration. And if we don’t tell Congress to pass the Arbitration Fairness Act, it’s only going to get worse.

The Arbitration Fairness Act stands on the side of workers and consumers. It will make it illegal for companies to force binding arbitration. Instead, the Arbitration Fairness Act will make arbitration a voluntary option where both parties must agree to arbitration, rather than making it mandatory, binding, or forced.

  • Forced arbitration is the reason Jamie Jones of Houston, Texas cannot bring the men she accused of raping her on the job to trial.
  • Forced arbitration is the reason James Myers, also of Houston, Texas cannot bring the Halliburton-subsidiary he accused of demoting him due to age and race discrimination to trial.
  • Forced arbitration is the reason Irene Lieber of Brooklyn, New York cannot bring MBNA, the credit card company that forced her to pay $45,000 in stolen credit card fees, to trial.

For those who want to help make sure the Arbitration Fairness Act is passed, and stories like these never happen again, the Fair Arbitration Now Coalition has set up an easy-to-use website. The site not only calculates who your member of Congress is, but places the phone call, so you don’t even have to dial the number or worry if you’re calling the wrong office.

Here’s how it works:

1. You go to this website: http://bit.ly/arbitrationfairnessact which has been set up by the Fair Arbitration Now Coalition and sponsored by Workplace Fairness.
2. You enter your name, address, phone number, and zip code, then click “submit.”
3. Your two Senators and local Representative will be listed. Choose one of them and select “call now.”

(If it seems easy so far, you’re right. It is!)

4. Review the short script which starts, “Good day. I am a constituent and…”. This is a suggested script you can use when calling the representative’s office.
5. When you are ready to place your call, click “place call”, found at the top of the page.
6. A few moments later you’ll be pleasantly surprised to receive a phone call at the phone number you entered in step two. It will be a short recorded message from Paula Brantner, from Workplace Fairness and the Fair Arbitration Now Coalition, thanking you for your help and reminding you to mention that you are a constituent when you talk to your representative’s office.

(If you’re like me and you’ve never placed a call to a Congressional office you might be a little nervous at this point. But that’s ok. Just take a deep breath and remind yourself that this is democracy in action and making these calls is exactly how we do our part to get this bill passed.)

7. After Paula’s short message DON’T HANG UP. The Click-to-Call system will place a call for you directly to your selected Congressional office.
8. An office assistant will answer. Tell them you are a constituent and simply follow the script from step four.
9. Make note of the Congressional representative’s current position on the Arbitration Fairness Act, as well as the name of the person you spoke to and any additional comments, then click “submit your response.” The info will be submitted to the Fair Arbitration Now Coalition.
10. Be sure to go back and call your other two members of Congress.

You might be afraid of these 10 steps. But not to worry. You don’t need to know how to contact your Senator or Representative before making the call. You just need to visit http://bit.ly/arbitrationfairnessact and be willing to help put an end to forced arbitration with the Arbitration Fairness Act.

Fine print: by reading this blog entry you retain all your rights.

About the author: Brett Brownell is a New Media Fellow with the New Organizing Institute and Workplace Fairness, and was a blogger and videographer for the Obama campaign’s new media team.

Defense Attorneys Make Excuses, But the Outcome is the Same

Wednesday, October 1st, 2008

When attending the American Constitution Society’s panel following the release of Schwab and Clermont’s seminal report, Employment Discrimination Plaintiffs in Federal Court: From Bad to Worse?, I was expecting the defense representative on the panel to attempt to explain away the results (even in the midst of what has to be silent glee that their side is winning so handily). But no explanation the other side can come up with puts a dent in the basic premise of the report: employment discrimination plaintiffs have it worse than other kinds of plaintiffs in our federal courts.

Cyrus Mehri’s excellent testimony before the Senate Judiciary Committee (Part I, Part II) lays out the new report’s three basic premises:

  • When employers win at trial, they are reversed by the U.S. Courts of Appeals 8.72% of the time. When employees win at trial, they are reversed 41.10% of the time.
  • There has been an absolute drop in employment discrimination cases of 37% from fiscal 1999-2007.
  • Juries rule in favor of plaintiffs in job cases 37.63% of the time versus 44.41% in non-job cases. District court judges, however, rule in favor of jobs plaintiffs only 19.62%, while ruling in favor of non-jobs plaintiffs 45.53% of the time.

Rather than dealing with why federal district court and appeals court judges might be biased, I guess it’s easier to try to explain away the absolute drop in cases.  And if you’re a defense lawyer, you might try to explain in a way that doesn’t implicate the other two findings, as if the fact that plaintiffs have difficulty winning before trial court judges, and hanging onto even the successes upon appeal, doesn’t have anything to do with it.

Instead, we’re expected to believe some of the following excuses, according to Eric Dreiband, former general counsel of the EEOC, who is now back to representing defendants at Jones Day.  (Listen to Dreiband’s presentation; Windows Media Player required). And another defense-oriented article responding to the study repeats some of the same excuses.

1.  Plaintiff’s attorneys are taking more wage and hour cases under the FLSA.

There has admittedly been a rise in the number of wage and hour cases, especially class actions, brought under the Fair Labor Standards Act in recent years.  Depending on who you ask, there are varying reasons for that, whether it’s because employers are trying to cut corners by misclassifying employees, there’s an increased awareness of the FLSA among workers, making it more likely they’ll ask questions about their classification, or if, as plaintiffs’ attorneys will acknowledge, it’s an act of self-preservation because of the three points detailed above.  Bringing a case under a statute that doesn’t require evidence of intent can be a lot easier than bringing a discrimination case:  either an employer violated the FLSA or it didn’t, and it doesn’t matter what it intended to do as it does in discrimination cases.

But this point is almost irrelevant if you’re one of the hapless plaintiffs with a discrimination case, not a wage and hour case.  Defense attorneys aren’t arguing that it’s impossible for plaintiffs with strong discrimination cases to get a lawyer, because all of the skilled plaintiffs employment lawyers no longer have time to take them, because that’s simply not true.  Bottom line:  the fact that there are now more FLSA cases doesn’t detract at all from the premise that employment discrimination plaintiffs have it bad.  They’re two completely different things that both happen to affect workers.

2. More cases are ending up in arbitration, instead of the courts.

Certainly, there are employers who believe that requiring all of their employees to submit their employment claims to arbitration benefits them, and they’re probably right. As Paul Bland’s excellent blog post reminds us,

“If you want to work here,” millions of employees are told, “you have to agree that any disputes you have with us–even if we cheat you, even if we break our contract or break the Fair Labor Standards Act or a basic civil rights act–will be submitted to binding arbitration with an arbitrator who is chosen by an arbitration company whom we pick. If you don’t like it, you can’t work here.”

Plenty of evidence suggests that just like what’s happening in federal court, employees forced into the arbitration process don’t fare very well. (See Alexander Colvin, Empirical Research on Employment Arbitration: Clarity Amidst the Sound and Fury?, Employee Rights and Employment Policy Journal, Vol. 11, No. 2 (2007). In fact, employees forced into arbitration may fare worse there than they do in court, according to Colvin’s piece, the leading academic study of thousands of publicly reported employment cases in arbitration. So again, the fact that more employees have cases in arbitration instead of federal court hardly contradicts the conclusions of the Schwab and Clermont study, when the evidence shows that plaintiffs forced into arbitration are even worse off there than in court.

3. More plaintiffs are going to state court instead of federal court.

In many states, plaintiffs in discrimination cases have the option of choosing between state and federal court, and attorneys must make the strategic decision about where the case is most likely to be successful. Admittedly, strategy sometimes dictates that a worker will fare better in state court, in states where there are no damage caps limiting the type and/or amount of damages that can be awarded, and where judges and juries may be more receptive to employment cases than those in federal court, making it more likely that a jury will hear a case rather than have it thrown out on summary judgment.

However, for every state where a plaintiff is likely to fare better in state court, we can name one where they will be worse off in state court, or not have the ability to make that choice at all. Some states don’t even have their own antidiscrimination statutes, or have what’s known as a “private right of action” which allows workers to enforce their rights in court. Others have more restrictive damage caps than those under federal law, which haven’t changed since 1991. (That’s longer than it’s taken to raise the minimum wage, and we know how long that took!) Some state judges are relatively unfamiliar with employment statutes compared to federal judges, and others, forced to rely on campaign contributions, tend to favor those who can contribute the most to their re-election campaigns, while federal judges are appointed for life. Unfortunately, we have a relatively small amount of evidence about outcomes in state courts, but what we do have makes this one a tossup at best.

4. More cases are being resolved by the EEOC pre-litigation.

Of all the excuses proffered, this one had the most potential to persuade us that plaintiffs were actually benefiting. The EEOC has invested heavily in its mediation program which works to resolve claims before they are investigated, or, in some cases, as part of the conciliation process between employer and employee. And Mr. Dreiband, as the EEOC’s former general counsel, was very knowledgeable about the EEOC’s program.

But, as the saying goes, where’s the beef? I asked Mr. Dreiband following his presentation whether the EEOC had studied whether mediation was actually beneficial for plaintiffs in terms of damages awarded. He was unaware of any such studies, and indeed, the studies on the EEOC’s website are limited to the parties’ satisfaction with the process, as well as participating mediators’ evaluation of the program.

Initially, it sounds good when you hear that cases are resolved quickly, and before there is any litigation. Most people just want to move on with their lives, rather than spend years fighting their employer in court. But several aspects of the push to resolve cases so early should give worker advocates pause. A case resolved before any discovery takes place may mean that key evidence that makes the case a valuable one never sees the light of day. A case resolved where the employee doesn’t have an attorney may mean that the employee is outmatched and overcome by the power imbalance on the other side, as rare is the case where an employer wades in to any case without representation. And a process where 13.5% of cases settle for non-monetary compensation makes you wonder just how many people out there are settling for an apology or a good reference, no matter how much they were damaged.

Admittedly, a certain percentage of these cases would have been lost anyway, but settling a case for a token amount of money and an apology may not be much better. Before the EEOC so heavily touts the benefits of mediation, they should study exactly who benefits. Is it the employer who benefits most when litigation goes away quickly and cheaply? We simply don’t know.

So let’s review:  reducing the number of cases in federal court, no matter what the reason, doesn’t:

  • explain why plaintiffs fare so much worse in front of federal district court judges than juries;
  • explain why employment discrimination plaintiffs fare much worse than other plaintiffs on appeal;

And it doesn’t even explain that the reduction in federal court cases means plaintiffs are faring better in other forums. In fact, it may mean that, like the movie “Dumb and Dumber,” Schwab and Clermont’s next report should be called “Worse and Worser.”

Labor In Exchange for One’s Rights

Monday, September 15th, 2008

A large and growing number of employers across the United States require current and prospective employees to sign away core constitutional rights as a condition of getting a job. “If you want to work here,” millions of employees are told, “you have to agree that any disputes you have with us–even if we cheat you, even if we break our contract or break the Fair Labor Standards Act or a basic civil rights act–will be submitted to binding arbitration with an arbitrator who is chosen by an arbitration company whom we pick. If you don’t like it, you can’t work here.

These provisions are common. Big Box retailers have them, restaurants have them, companies like Halliburton have them, and many more. Exact numbers are hard to come by, but it’s clear that today there are far more workers in America who have been required to sign mandatory arbitration clauses than there are workers who are members of unions. If one were trying to figure out whether the balance of power had shifted one way or the other between employers and employees, it would be hard to find a more obvious measure. A smaller and smaller percentage of American workers have been able to organize into groups to balance out the power of employers, and a larger and larger percentage of American workers have been forced to give up their legal rights and submit to corporate-chosen, largely non-transparent tribunals whose decisions are not meaningfully reviewed by any court. What a deal!

Arbitration tends to work pretty well in the collective bargaining process, where both sides–the union and the employer–are pretty sophisticated “repeat players,” and where neither party dominates who selects the arbitrators. Arbitration between employers and individual employees tends to be a very different situation, though. While individual employees rarely know how a given arbitrator has ruled in past cases (the arbitrations are generally confidential, and thus secret), the employers know who’s who. Arbitrators who rule for an employee risk being blackballed, and never working as an arbitrator again.

As a lawyer who represents employees and consumers in an adversary process, I’ve learned to be suspicious when the party who is adverse to–against–my client says it’s doing something for my client’s good. Thus, I’ve always taken it with a grain of salt when big corporations say things to the effect of “the reason we’re choosing to force our employers to submit to arbitration is because arbitration is fairer and better for the employees.” It reminds me of the line in Caddyshack where the Judge self-righteously tells the caddy “I’ve sent boys younger than you to the electric chair. I didn’t want to do it; I felt I owed it to them.”

Thus it should be no surprise that the leading academic study of thousands of publicly reported employment cases has found conclusively that non-unionized employees who have to take their disputes to pre-dispute binding arbitration win less frequently than if they could have taken their cases to court. The same study found that in those cases where employees do win in arbitration, they tend to win smaller awards than they would have been likely to win in court. (See Alexander Colvin, Empirical Research on Employment Arbitration: Clarity Amidst the Sound and Fury?, Employee Rights and Employment Policy Journal, Vol. 11, No. 2 (2007). (Purchase the article.) There are some studies paid for by the Chamber of Commerce that purport to show how employees benefit from mandatory arbitration (some by carefully selecting the cases they study, some by blurring together data from arbitration in the collective bargaining setting and the non-unionized setting, and some by simply lying), but the Colvin piece is the real deal.

The U.S. Supreme Court has repeatedly said that a cornerstone of arbitration is that it’s voluntary, and consensual. The Court sees nothing involuntary about telling a long-time employee that they have to sign a binding arbitration clause or lose their job. “After all,” the argument runs, “they could always choose to work for someone else.” This argument is pretty empty for most employees. It’s only a short step from that to saying that someone who signs an arbitration clause at gunpoint has made a voluntary choice – “hey, they could have chosen to be shot.”

The legislative history of the Federal Arbitration Act makes very clear that this state of affairs is not what Congress intended in 1924. From talking to my clients, there are a large and growing number of people who feel that mandatory arbitration for employees is unfair, and that Congress needs to do something to correct the problem.

About the Author: F. Paul Bland, Jr. is a Staff Attorney for Public Justice (formerly Trial Lawyers for Public Justice), where he handles precedent-setting complex civil litigation. He has argued or co-argued and won more than twenty reported decisions from federal and state courts across the nation, including cases in four federal Circuit Courts of Appeal and six state high courts. He was named the “Vern Countryman” Award winner in 2006 by the National Consumer Law Center, which “honors the accomplishments of an exceptional consumer attorney who, through the practice of consumer law, has contributed significantly to the well being of vulnerable consumers.” He is a co-author of a book entitled Consumer Arbitration Agreements: Enforceability and Other Issues, and numerous articles. For three years, he was a co-chair of the National Association of Consumer Advocates. He also has won the San Francisco Trial Lawyer of the Year in 2002 and Maryland Trial Lawyer of the Year in 2001. Prior to coming to Public Justice, he was a plaintiffs’ class action and libel defense attorney in Baltimore. In the late 1980s, he was Chief Nominations Counsel to the U.S. Senate Judiciary Committee. He graduated from Harvard Law School in 1986, and Georgetown University in 1983.

Your Rights Job Survival The Issues Features Resources About This Blog