Companies Can Require Employees To Arbitrate To Resolve Racial Bias Claims. This Law Aims To Bring The Chance At Trial Back.

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Forced arbitration clauses get a bad rap. Understandably -- most people don't even know that after some purchase or acceptance of a job that they are waiving their right to sue potential wrongdoers in court. Businesses, however, love them; mandating arbitration in the event of conflicts is right up there with being sure to register your business in Delaware, especially once you factor in the potential to hire serial arbitrators that "unofficially" have your back when something goes wrong. Egregious limitations on a party's ability to seek justice in court because of forced arbitration clauses sometimes see the light of day. So much so that Congress passed a law called the Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act (EFASASHA) to ensure that instances of sexual assault and sexual harassment aren't swept under the table by such "agreements." There has been a recent push for the enactment of a similar law that would prevent forced arbitration in response to race-based conflicts. From Bloomberg Law:

Last month, Rep. Hank Johnson (D-Ga.) and Sen. Cory Booker (D-N.J.) introduced the Ending Forced Arbitration of Race Discrimination Act (H.R. 3038/S.1408), which would give workers the option of bringing their racial bias claims to court even if they initially agreed to arbitrate such workplace disputes.

Passage will be an uphill battle, but some see the bill as a way to tilt the balance of power and allow workers to use class actions to stop race discrimination in the workplace.

"It would be highly significant and definitely shake up the legal landscape" for employees, said Jean Sternlight, a law professor at the University of Nevada who specializes in conflict resolution. "I am not, by any means, an opponent of arbitration. But what I and other critics of mandatory arbitration believe is that arbitration can work well but it should be chosen knowingly by the parties."

That last bit about arbitration being chosen knowingly by the parties is a huge part. It sucks to find out that your right to a day in court is no longer guaranteed because of something you didn't know you agreed to. Speaking of, did you know that if you have a credit card, you likely consented to a forced arbitration agreement? Credit card companies love 'em because they come out winning an overwhelming amount of the time. Fair Arbitration Now has gotten into some of the numbers and it's really worth reading to grasp how outcome setting these clauses can be:

In "The Arbitration Trap: How Credit Card Companies Ensnare Consumers," Public Citizen analyzed nearly 34,000 arbitration cases filed with NAF between 2003 and 2007 and found that creditors won an astounding 93.9 percent of the cases in which an arbitrator was appointed. More than 80 percent of the time, the arbitrator's decision was based solely on documents provided by the business party (usually a credit card company or debt collection firm). In such "documents only" cases, arbitrators ruled in favor of the company 99.99 percent of the time. In the 2,019 cases in which the arbitrator held a hearing, the consumer prevailed only 1.4 percent of the time.

Imagine, say, some attorney worked for a law firm where they had a hunch that their partner's decision to skip over them for work was discriminatory and then found some very clear evidence to support that they were not giving classes of colleagues the time of day, that's something that you'd likely want a court to see, right? It is not uncommon for arbitrators to be the ones who decide which pieces of information enter the conversation at all. And if it's between some schmuck who had a bad run in with a company or the company that's paying the arbitrator for their service, who do you think the arbitrator is skewed toward siding with? Do you think that arbitrators that routinely side with the little guy get picked up by the company again?

These dynamics are rough enough when it comes to credit cards, just imagine the difficulty of dealing with an imposed arbitration instead of court after one of your coworkers got a little too non-sober and tried to rip your wig off or something. Thinking that you'll take the money to end the conflict and do your best to go to the media to spread awareness afterward? Good luck not having to sign an NDA as part of the agreement.

Arbitration isn't all bad -- it can offer degrees of speed and cost effectiveness that trials just do not. But, and especially in cases where there was a grave issue at stake, that option should be a choice each of the parties agree to.

Ending Forced Arbitration of Race Claims Is New Diversity Focus [Bloomberg Law]

Chris Williams became a social media manager and assistant editor for Above the Law in June 2021. Prior to joining the staff, he moonlighted as a minor Memelord(TM) in the Facebook group Law School Memes for Edgy T14s. He endured Missouri long enough to graduate from Washington University in St. Louis School of Law. He is a former boatbuilder who cannot swim, a published author on critical race theory, philosophy, and humor, and has a love for cycling that occasionally annoys his peers. You can reach him by email at cwilliams@abovethelaw.com and by tweet at @WritesForRent.