Home / Your Job or Your Rights: How Employers Force Workers Into Arbitration

Your Job or Your Rights: How Employers Force Workers Into Arbitration

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Seven of Jamie Leigh Jones’s male co-workers welcomed her to her new job in Iraq by drugging and gang-raping her, according to the federal Equal Employment Opportunity Commission. She says that the rapists were so violent that afterwards she had to undergo reconstructive surgery on her breasts.

Ms. Jones sought her day in court, but her employer, Halliburton, tried to bar the courthouse doors. When she took the job Halliburton made her sign an arbitration agreement which forces employees to give up their rights to take employment-related disputes to a jury. Instead, they pledge to resolve disputes through secret, binding arbitration.

Supreme CourtOn Wednesday the Supreme Court issued an opinion in another forced arbitration case, AT&T vs. Concepcion, which involved cell phone users whose service contract required them to take disputes to arbitration and not to court. It also prohibited them from bringing a class action in arbitration, leaving them no way to bring a class action at all. The Supreme Court announced that that is just fine. It is legal for a company to unilaterally ban customers from court and eliminate the possibility of a class action.

Many employers force similar arbitration provisions on their employees. In fact, there is a decent chance that you gave away your right to a jury without realizing it when you accepted your current job. Like mobile phone and credit card companies, employers hide this tidbit in jargon and small print. If you want the job, you trade your right to a jury, and in its place you get private, paid arbitrators whose decisions are essentially unappealable and who don’t have to follow the law. They don’t even have to explain the reasoning behind their decisions.

Not every employer pulls this trick, but many of the big ones do, including Anheuser-Busch, Cisco Systems, Dillard’s Department Stores, Halliburton, Hooter’s, and most major employers in the financial services industry. Approximately 48 million American workers may be bound by arbitration agreements, according to the National Employment Lawyers Association.

Employers favor arbitration because it can be faster and cheaper than court. But time-consuming judicial procedures are meant to make the process fair to both parties. Their absence from arbitration weights the balance in favor of employers: for instance, in court, employers have to turn over damaging documents and produce supervisors and co-workers for depositions; in arbitration, employers can usually keep all that information to themselves. Employers also like that arbitrators have a financial incentive to favor them: employers hire the same private arbitration companies over and over, whereas each employee tends to be a one-time player.

In Ms. Jones’s rape case, federal courts ruled that several of her claims were not covered by the forced arbitration clause in her employment agreement because they were not related to her employment. Those claims included: vicarious liabilitylaw books and gavel for assault and battery, intentional infliction of emotional distress, in addition to negligent hiring, retention, and supervision of the employees involved in the assault and false imprisonment. The last claim arose from Halliburton’s allegedly locking Ms. Jones in a container after the alleged gang-rape and refusing her to make even a phone call.

Therefore those claims could be heard in court rather than arbitration but only after the arbitration of her other claims ended. This ruling validates the statements of many federal courts, below the Supreme Court, that forced arbitration is unfair and that it is particularly unfair in the context of employment discrimination claims. 

Halliburton fought hard to convince the courts that all of Ms. Jones’ claims based on her alleged assault should be heard in private arbitration and not in open court because it knew it would be better off if it could keep Ms. Jones’s brutal allegations muffled in an inherently biased arbitration instead of public in an open, unbiased court. Despite its efforts, this June Ms. Jones’s remaining claims will go to trial.

The Supreme Court has signaled that it will not stop companies from forcing arbitration on individuals, and in the AT&T case it ruled that states may not do so either. Yet 59% of Americans oppose forced arbitration according to a study by Lake Research Partners. If employees (or consumers) are going to be protected from take-it-or-leave-it forced arbitration agreements, it will have to be by an act of Congress.

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About Piper Hoffman

  • Leroy

    IIRC years ago a lawyer told me that a person cannot sign away his constitutional civil rights, even in a contract.

    If this Binding Arbitration situation is allowed to stand, then it seems to me that Constitutional Civil Rights are negated and rendered ineffective. That’s horrible!

    What do you think the Founders would say?

    Where is that Libertarian army to fight against such flagrant abuses of our individual Freedoms? Or are the bureaucratic oppressors too close to their own political predilections?

    Does the SCOTUS decision mean that anyone who signs a work contract containing an Arbitration clause is now subject to rape?

  • It isn’t only consumers who now have no chance to defend themselves against corporations — it is low-income workers too. Minimum-wage employees whose employers don’t pay them for overtime, for instance, can’t afford their own lawyers, and if their employer has a forced arbitration policy like AT&T’s, they can’t band together for a collective action. It’s like their employer robbed them and then barred them from reporting the theft, much less recovering their stolen property.

    Those class proceedings that Justice Scalia mentioned are no longer open and didn’t result in a final award probably ended with a settlement that made the employer pay the workers most if not all of the wages it had stolen. Stolen wage cases can involve four or five figures per worker, money that a minimum-wage earner sorely misses. After AT&T v. Concepcion, a lot of those employees will have no chance of getting the money they earned.

  • The AT&T vs. Concepcion 5-4 decision busts the chops of class-action suit lawyers, but that is all it does. The punditry about the conflict between liberals’ support of consumer rights versus conservatives’ support of states’ rights remains alive and well. That’s nice.

    Jones’ civil rights are not nice. They were violated.

    Justice Scalia cited statistics from the American Arbitration Association that showed the typical consumer proceeding ended in four to six months. 121 out of 283 class proceedings opened 2009 were still opened and zero had resulted in a final award. I find it hard to care about consumerism here.

    It is not that Halliburton or any other company is more evil than another. The idea that rape cases are subject to contractual arbitration is not only evil, it is obscene.


  • Leroy

    We need a blog army of Libertarians to combat this infringement of American Freedom by malevolent organizations.

  • William Waite

    Thank you for a very enlightening piece. As inclined as some individuals are to declare all things Halliburton as inherently evil, in this case, their employment practices concerning involuntary arbitration had a decidedly evil outcome – at least until Ms. Jones has her day in court. As for other firms, I think the practice of requiring arbitration for employment related issues ought to include an advisory box or the like with bold text indicating to the prospective employee that by agreeing to such, they may be waiving important protections.