Forced arbitration clauses, which are now used in a wide range of companies, prevent a wronged party from bringing a case to court and are now found in over 55 percent of employment contracts. Instead, the dispute must be settled in secret arbitrations, usually by an arbitrator chosen by the defendant. In cases of sexual assault or harassment, these forced arbitration clauses can prevent harassers from receiving public or legal consequences, opening the door for serial and long-term harassment.
Harassment Widespread, Retaliation Feared
A study by the Equal Employment Opportunity Commission estimates that anywhere from 25 percent to 85 percent of women report having experienced sexual harassment in the workplace. The number fluctuates because the Commission says 75 percent of abuse incidents go unreported. Many employees fear retaliation if they speak out, including the loss of their jobs. The Commission also points out that forced arbitration weakens “an employer’s incentive to proactively comply with the law.”
Forced arbitration clauses not only protect abusers from a court of law but also silence employees from speaking publicly once through arbitration. Gretchen Carlson, a former Fox News anchor, sued Fox News after she was fired for allegedly refusing sexual advances from Fox News Chairman Roger Ailes. Fox attempted to have her claims adjudicated in closed-door mandatory arbitration instead of court, effectively requiring that the details of her case be legally hidden from the public. Since settling her lawsuit with Fox News, Gretchen Carlson has been an advocate for legislation that prohibits forced arbitration clauses in employment and consumer contracts.
Legislation the Next Step
Outlawing forced arbitration clauses in employee contracts as a protection for American workers seems like a logical step, yet those protections are under attack. Last year, the Administration repealed an executive order safeguarding employees of federal contractors from forced arbitration clauses in their employment contracts. Congress then canned a new regulation from the Consumer Finance Protection Bureau that would have stripped forced arbitration clauses from contracts for financial services, like checking accounts and investment services. Recent Supreme Court decisions also have upheld the broader use of forced arbitration clauses in consumer contracts.
More encouraging was the announcement by Microsoft last December that it would eliminate forced arbitration clauses in employment agreements, showing that the flood of harassment accusations has gone beyond individual cases to inspire changes in corporate policy. However, given opposition by the U.S. Chamber of Commerce to closing this loophole, it is unlikely that most other major corporations will follow suit.
Thus, a bipartisan group from both the U.S. House and Senate has introduced legislation to ban arbitration clauses in harassment cases from all employment contracts. Called the Ending Forced Arbitration of Sexual Harassment Act, this bill “prohibits a pre-dispute arbitration agreement from being valid or enforceable if it requires arbitration of a sex discrimination dispute.” Our hope is that with support from both sides of the aisle, this law will be passed to give those who have been sexually harassed or abused on the job their rightful day in a real court of law.