It is shocking how many employers force workers to submit to mandatory arbitration as a condition of employment. According to estimates from the Economic Policy Institute, more than 60 million American workers have been required to sign, or unbeknownst to them, become bound by forced arbitration clauses. Among non-union private sector employees, 56.2% have mandatory arbitration clauses, a percentage that has risen significantly over the past few decades.
Mandatory arbitration clauses effectively strip employees of their rights and remedies to publicly sue their employer for unlawful harassment, discrimination, and other civil rights violations. In contrast to a law suit, mandatory arbitration requires such claims to be dealt with behind closed doors through binding arbitration not subject to judicial review.
Typically, arbitration puts employees at a significant disadvantage when they have a dispute with their employer. There are several reasons for this:
- No Jury Trial: Unlike a court trial heard by a jury of their peers, the dispute is decided by an ostensibly neutral, third-party arbitrator or panel of arbitrators. But neutrality may not be possible when the decision-makers are selected and paid by employers on a repeat basis.
- No Right to an Appeal: An arbitrator’s decision is usually final and binding, leaving the employee no legal recourse when dissatisfied with the outcome.
- Limited Discovery: Parties in arbitration generally are not required to provide full and fair discovery of documents and evidence required in a court proceeding. This limitation can effectively prevent an employee from obtaining evidence to substantiate their claim and demonstrate wrongful conduct by the employer.
- No Requirement to Follow the Law: Unlike a court proceeding, courts do not generally overturn the ruling of an arbitrator strictly because of an error in the law.
- Secretive Proceedings: Arbitration is a secret proceeding that is not open to judicial, public or media scrutiny. In addition, the employee is routinely required to keep the results of the proceeding confidential, at the risk of being subjected to monetary and other penalties.
- Limited Right to Recover Damages: Even if the employee wins the arbitration proceeding, some clauses may limit the type and scope of recoverable damages.
Until recently, it seemed that employers held all the cards to force workers to give up their civil rights and submit to arbitration as a condition of employment. As a practical matter, workers are forced to make an untenable choice: give up your civil rights or no job. This unconscionable dynamic is being questioned in the wake of the #MeToo movement and recent high-profile gender discrimination cases publicly litigated against Big Law firms.
In the past year, employees, job candidates, law firm partners, equal rights advocates and law school students have taken a public stand against forced arbitration as a condition of employment. High-profile organizations have been called out and publicly pressured to end their mandatory arbitration policies. In the glare of the media spotlight, big-name tech giants including Microsoft, Google, and Facebook have announced that they would end forced arbitration for employees who have sexual harassment claims. Uber and Lyft have followed this trend, along with other organizations across a wide range of industries.
How the Forced Arbitration Backlash is Sweeping the Legal Industry
It started with a tweet from Harvard Law School lecturer Ian Samuel back in March 2018. Samuel tweeted parts of a leaked mandatory arbitration agreement from Munger, Tolles & Olson, LLP. The tweet showed how Munger’s forced arbitration clause shielded them from litigation for any disputes its associates may have, including sexual and racial discrimination claims. Samuel’s tweets and subsequent posts in the thread were retweeted hundreds of times and picked up by several media outlets.
The Power of Public Scrutiny
The results were swift and significant. The next day, Munger announced that they would no longer require employees to sign a mandatory arbitration agreement. That same day, another Big Law firm, Orrick, Herrington & Sutcliffe, announced that they were also ending forced arbitration agreements. Shortly thereafter, a third firm, Skadden, Arps, Slate, Meagher, & Flom, announced that they too would end mandatory arbitration. Not surprisingly, sunlight proves to be a powerful disinfectant.
The Power of The Collective
In the memorable words of the late President John F. Kennedy, “One person can make a difference and everyone should try.” An organized collective wields even greater power to effect positive change more broadly and efficiently. This has proven to be true in the movement to end forced arbitration of employment claims. Following the outing of Munger and immediate backlash, the issue of forced arbitration in Big Law employment relationships was picked up by the Pipeline Parity Project, a group of Harvard Law School students working collaboratively with students, faculty, and alumni to end discrimination and harassment in the legal profession.
After conducting a survey identifying firms that impose mandatory arbitration as a condition of employment, the Pipeline Parity Project outed Kirkland & Ellis and challenged the firm to abandon its forced arbitration policy. Using the hashtag #DumpKirkland, the group called for students to boycott the firm during the summer recruiting season. Less than two weeks later, Kirkland dropped its forced arbitration policy. The week after that, Chicago-based Sidley Austin, one of the nation’s largest and most lucrative law firms, announced that it has revised its forced arbitration policy and will no longer require associates, summer associates, or non-attorney staff members to sign forced arbitration.
This is Just the Beginning
Title VII of the Civil Rights Act and related federal and state anti-discrimination laws were enacted to ensure that all workers are afforded fair and equal treatment in a safe workplace. No one, including attorneys and partners in law firms, should be forced to give up their civil rights and legal remedies to keep their jobs. Some argue that mandatory arbitration benefits employees by providing a private forum that will spare the claimant embarrassment, reputational harm and black-balling by future potential employers. This argument, in my view, is unpersuasive. Eliminating forced arbitration as a condition of employment does not preclude the option of voluntary arbitration as a means of resolving a dispute. On the other hand, forced arbitration facilitates and perpetuates sexual harassment and discriminatory practices in the workplace by allowing employers that may be subject to multiple complaints by multiple employees to escape judicial and public scrutiny and accountability.
The growing movement to eliminate forced arbitration as a condition of employment is encouraging — a fine example of how positive change can be achieved through public scrutiny and the power of The Collective. Though there have been some major successes in the past year, there is a lot of work left to be done. Many Big Law firms still impose mandatory arbitration as a condition of employment for staff, associates and partners. Without doubt, some firms hope to “ride out the storm” and keep doing business as usual. Outside the legal profession, millions of workers in other industries are still unfairly forced to give up their civil rights as a condition of employment.
The #MeToo movement provided momentum to fight against mandatory arbitration policies. Equal rights advocates and collectives must continue to press forward in the coming weeks and months to raise awareness to stamp out unconscionable practices requiring workers to give up their civil rights and remedies as a condition of employment.