Today, millions of employers have instituted pre-dispute, binding, forced arbitration programs to resolve employment disputes. Companies write fordced arbitration programs into employment applications, employment handbooks, and even into pension plans. Employees must sign these documents if they want to get a job or to keep the job they have. And if employees subsequently believe their employer is violating their rights, it is mandatory that they take their claim to arbitration; and the arbitrator's decision is binding. Because participation in these programs is determined before any dispute arises, employees cannot knowingly consent to waive their rights - at that point, they don't even know what their rights are.
The use of pre-dispute binding forced arbitration clauses as a tool for employers to “stack the deck” in their favor in disputes with their employees has grown exponentially over the last 15 years. Today, at least one-fifth of all employees are subject to employer imposed forced arbitration – a greater proportion of the workforce than is protected by union contracts. The vast majority of these arbitration clauses are written solely by employers’ lawyers – there is no negotiation with employees about their terms – and employees have no choice but to accept them or lose their jobs.
The right to have claims heard by a court of law is a cornerstone of the private enforcement of a panoply of hard won labor and employment laws – including laws protecting against discrimination and harassment on the basis of race, color, national origin, sex, religion, age, and disability; requiring employers to pay overtime to employees working more than 40 hours in a week; and guaranteeing jobs after military or reserve service or family and medical leave. In private lawsuits challenging violations of these laws in court, the American legal system’s safeguards of due process exist: an impartial judge, provided by the government, who vows to follow the law and give reasoned opinions; a jury of one’s peers; uniform, established procedures governing the case; open, public proceedings; recorded decisions that have precedential value; and the availability of appeals from adverse rulings.
Employment is not the only area in which private enforcement of legal protections is routinely undermined by companies’ imposition of binding forced arbitration. The problem is rampant in the consumer area as well. Cell phone and computer purchases, credit cards, auto loans, insurance policies, nursing home and assisted-living admissions, and even treatment by medical professionals, are all governed by contracts containing forced arbitration clauses.
The Institute and its allied organizations strongly support arbitration when it is voluntarily agreed to by the employee post-dispute.