It’s Time for Congress to End Forced Arbitration in All Cases — Not Just Sexual Assault
Chloe Nguyen (PPS ‘24)
Forced arbitration clauses make the law optional for corporations. It’s time for Congress to level the playing field and empower all victims to pursue justice in a court of law.
In early March, Congress passed a bill banning the use of forced arbitration clauses in employment contracts for cases of sexual assault. These clauses force victims to resolve disputes behind closed doors with arbitrators, or conflict mediators, who are chosen by employers and are not beholden to the law. Sen. Kirstin Gillibrand (D-NY) argues that the Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act is “one of the most significant workplace reforms in history,” as victims of sexual assault and harassment can finally prosecute their abusers in court.[i]
Although this reform may reduce the ability of high-level executives to abuse their power in the workplace, the bill does not go far enough. Forced arbitration clauses do not solely exist in cases of sexual assault: they are also used in the fine print of consumer and employment contracts to reduce corporate liability for damages. If Congress wants to empower citizens to hold corporations accountable for abuse and negligence, they must pass the Forced Arbitration Injustice Repeal (FAIR) Act, which outlaws forced arbitration in all cases, not just sexual assault.
Forced arbitration clauses substantially reduce the likelihood that individuals with legitimate claims of corporate maltreatment can receive restitution. Corporations all but ensure disputes are resolved in their favor: they hire the arbitrators, require steep payment to initiate a claim, and shield themselves from accountability by keeping proceedings secret.[ii] Victims are further deterred from making claims by the requirement that they pay the corporation’s legal fees if they lose the settlement.[iii]
In addition, congressional regulations on corporate behavior are unenforceable if forced arbitration is legal. Arbitration enables corporations to evade Congressional standards regarding product and workplace safety, minimum wages, credit card extensions, discrimination, and more.[iv] Employees with legitimate claims about discrimination in the workplace cannot seek out the restitution promised them by the Civil Rights and Equal Pay Act if their contracts include forced arbitration clauses, for example.[v] If victims do choose to arbitrate, they win less often and receive less money than they would in court.[vi]
Other egregious examples where forced arbitration clauses precluded victims from receiving justice include disputes over abuse of the elderly in nursing homes[vii] and assault of rideshare passengers by inadequately vetted Uber drivers.[viii] If victims of sexual assault in the workplace have a right to sue, why don’t victims of assault, abuse, and negligence in nursing homes and Uber rides?
The answer: politics. In 2017, the #MeToo movement took the world by storm as women from all walks of life came forward and shared their stories of sexual harassment or assault. This movement brought heightened awareness of the widespread nature of sexual assault, encouraging legislators to act. But in the case of consumers’ and workers’ rights more broadly, there has not been a widespread social movement which has pressured government to act in those groups’ interests since Occupy Wall Street.
It doesn’t help that a series of Supreme Court decisions have stacked laws in favor of corporations. Forced arbitration clauses became significantly more powerful during the 1980s, after SCOTUS reinterpreted the Federal Arbitration Act to require disputes bound by arbitration clauses to be resolved behind closed doors.[ix] In 2010, the Citizens United v. Federal Election Commission decision enabled corporate donors to spend unlimited amounts on political campaigns as long as the spending was not directly coordinated with the campaign.[x] As a result, politicians are much more beholden to special interests. Since then, Congress has increasingly acted in the interest of corporations and the wealthy, rather than ordinary citizens.
The lack of political pressure brought on by major social movements, coupled with a strong focus on preserving corporate interests, has led Congress to enable corporations to rob victims of their day in court. The Ending Forced Arbitration of Sexual Assault bill was an exception, as the political pressure brought on by the #MeToo movement encouraged Congress to protect victims.
Now, Congress has the obligation to protect victims in all cases by banning forced arbitration writ large. The FAIR Act represents a major opportunity for Congress to restore its legitimacy as a guarantor of consumers’ and workers’ rights. If corporations can utilize forced arbitration clauses to avoid accountability for violations of congressional laws, Congress’s word is meaningless. Government must do more to leverage the law in favor of justice and away from donor’s pocketbooks.
Chloe Nguyen (PPS ’24) is a Public Policy Undergraduate at Duke University’s Sanford School of Public Policy. This piece was submitted as an op-ed in the Spring ’22 PUBPOL 301 course. This content does not represent the official or unofficial views of the Sanford School, Polis, Duke University, or any entity or individual other than the author.
[i] Walsh, Deirdre. “Congress Approves Bill to End Forced Arbitration in Sexual Assault Cases.” NPR, February 10, 2022, sec. Politics. https://www.npr.org/2022/02/10/1079843645/congress-approves-bill-to-end-forced-arbitration-in-sexual-assault-cases.
[ii] The American Association For Justice Archive. “Forced Arbitration,” May 30, 2014. https://archive.justice.org/what-we-do/advocate-civil-justice-system/issue-advocacy/forced-arbitration-0.
[iii] Fair Arbitration Now. “What Is Forced Arbitration?” Accessed April 19, 2022. https://fairarbitrationnow.org/what-is-forced-arbitration/.
[iv] Stone, Katherine V. W., and Alexander J. S. Colvin. “The Arbitration Epidemic: Mandatory Arbitration Deprives Workers and consumers of Their Rights.” In EPI Briefing Paper, 1–30. Economic Policy Institute, n.d. https://files.epi.org/2015/arbitration-epidemic.pdf.
[v] Fair Arbitration Now. “What Is Forced Arbitration?” Accessed April 19, 2022. https://fairarbitrationnow.org/what-is-forced-arbitration/.
[vi] Stone, Katherine V. W., and Alexander J. S. Colvin. “The Arbitration Epidemic: Mandatory Arbitration Deprives Workers and consumers of Their Rights.” In EPI Briefing Paper, 1–30. Economic Policy Institute, n.d. https://files.epi.org/2015/arbitration-epidemic.pdf.
[vii] Haight Brown & Bonesteel LLP. “Who Has the Authority to Sign Arbitration Agreements on Behalf of a Resident at a Residential Care Facility for the Elderly?” Accessed April 19, 2022. https://www.hbblaw.com/who-has-the-authority-to-sign-arbitration-agreements-on-behalf-of-a-resident-at-a-residential-care-facility-for-the-elderly-12-04-2017/.
[viii] Letter to Board of Directors, Uber Technologies, Inc. “Open Letter to Board of Directors, Uber Technologies, Inc.,” April 26, 2018. http://www.wigdorlaw.com/wp-content/uploads/2018/04/Uber-Sexual-Assault-Victims-Open-Letter-to-Uber-s-Board-of-Directors.pdf.
[ix] Stone, Katherine V. W., and Alexander J. S. Colvin. “The Arbitration Epidemic: Mandatory Arbitration Deprives Workers and consumers of Their Rights.” In EPI Briefing Paper, 1–30. Economic Policy Institute, n.d. https://files.epi.org/2015/arbitration-epidemic.pdf.
[x] FEC.gov. “Citizens United v. FEC.” Accessed April 19, 2022. https://www.fec.gov/legal-resources/court-cases/citizens-united-v-fec/.