On November 16, 2021, Congress held a hearing at which several victims of sexual harassment/assault – including actor Eliza Dushku – testified about their negative experiences with forced arbitration. Their stories are horrific; their bravery admirable.
While New York has enacted legislation (Section 7515 of the Civil Practice Law & Rules) to curb forced arbitration in employment discrimination cases, efforts to use that statute have routinely hit a wall in court: namely, the Federal Arbitration Act (FAA), a federal statute which (when applicable) “overrides” CPLR 7515.
As highlighted by the recent testimony (and undoubtedly many similar experiences), forced arbitration inhibits employee rights in numerous ways.
1. Implicit bias. Arbitrators are often paid by employers – creating an obvious economic incentive to rule in employers’ favor to ensure the continued flow of business. To say the “quiet part out loud,” many if not most arbitrators’ revenue comes from employers, rather than employees, and arbitrators who rule in employees’ favor do so at their economic peril of losing future work.
2. Uneven negotiating power. Arbitration agreements are often included as part of “onboarding” paperwork which many employees are likely expected to review and sign in a relatively short timeframe, and which is presented at the conclusion of what may be a lengthy interview process. The employee – unless they find themselves in the rare position of being able to dictate terms (e.g., they possess a unique, non-fungible skillset) – will often be in the “take it or leave it” posture; needing a job, they are more likely to do the former. While some note that forced arbitration is a misnomer since no one is forced (i.e., physically coerced) to sign an employment agreement containing an arbitration clause, for many the choice between (a) signing an agreement in order to secure much-needed employment, on the one hand, and (b) foregoing said employment, on the other, is, practically, no choice at all.
3. Arbitration rules. In court, there are specific rules – governed by the Law of Evidence – dictating what information may be considered by the trier of fact. Arbitrators are not bound by the rules of evidence, but rather have significant discretion as to what evidence may be submitted and considered.
4. No jury trial. Arbitration will culminate with a decision issued not by a “jury of one’s peers,” but by a single person (or, in certain cases, a panel of arbitrators).
5. Limited review. Arbitration decisions are subject to a much narrower range/scope of review than are jury verdicts and court decisions.
6. Confidentiality. Arbitration is a creature of contract, and it is not uncommon for employers to include a confidentiality provision in their arbitration agreements. Keeping employee allegations out of the public (court docket/searchable) record may embolden discriminators and harassers who would otherwise be chastened by public disclosure of their adjudicated misdeeds.
To be sure, in certain cases, a victim of discrimination or harassment may prefer arbitration to filing in court for one or more reasons, including timing and cost (court litigation being more time-consuming and costly than arbitration), the desire to keep potentially salacious details out of a fully-searchable public court record/docket, etc. But the alleged benefits of arbitration in a particular case obscure the greater issue – namely, the problems associated with forced arbitration.