What Is Forced Arbitration?
Feb 21, 2020
Forced arbitration is a tactic that employers use to suppress their employees' rights to sue them. The Supreme Court has found that companies can force workers to give up their right to file a class-action suit and require employees to arbitrate any disputes individually. Workers who don't comply can be fired.
At Green Savits, LLC, our Florham Park employment lawyers have decades of experience fighting for workers' rights. We recognize that forced arbitration is an unfair practice that puts workers at a disadvantage. If your employer is trying to force arbitration on you and your coworkers, we will represent you in arbitration to help you get the compensation you deserve.
The History Of Forced Arbitration
Congress passed the Federal Arbitration Act in 1925 to help companies settle disputes with each other through arbitration because it can be quicker and less expensive than a lawsuit, as well as because the companies could choose an arbitrator who is more familiar with their industry than a judge.
However, over time, courts started to interpret the Federal Arbitration Act to allow companies to require workers and consumers to submit to arbitration as a condition for working at or doing business with the company.
This culminated in the 2018 case Epic Systems v. Lewis, in which the Supreme Court held that a company can force workers to individually arbitrate disputes, require employees to give up their right to a class-action suit, and fire workers who don't comply.
Why Forced Arbitration Is Unfair To Workers
Simply put, workers are less likely to win in arbitration, and when they do win, they receive far less money on average than they would through a lawsuit. This chart from the Economic Policy Institute breaks down how much of a disadvantage workers face when they enter arbitration:
In fact, forced arbitration often has the effect of preventing employees from filing a complaint altogether. Many times, a worker's grievance against their employer will be worth less than the legal fees required to pursue it. By allowing employees to combine many smaller claims into one bigger complaint, class-action lawsuits give them an incentive to stand up to their company.
If your company enforces a class-action ban, though, it puts workers in a position where they're unlikely to arbitrate for a small amount of money that won't even cover their legal fees. This then gives employers an incentive to cheat their workers, as long as they steal small enough amounts that employees won't want to arbitrate.
How To Fight Forced Arbitration
The best thing you can do when your employer forces arbitration on you is to call their bluff on a massive scale. Because companies use forced arbitration to prevent workers from filing complaints, they aren't always prepared when large numbers of their employees actually arbitrate.
In May 2019, after Uber forced arbitration on its workers, more than 60,000 drivers filed arbitration claims against it. The company's legal costs would have topped $600 million, so it instead settled the cases.
In February 2020, a judge ruled that DoorDash must individually arbitrate more than 5,000 individual cases after enforcing a class-action ban on its workers. With the company facing a bill of at least $10 million even to begin the proceedings, a settlement also appears likely.
Contact Our Florham Park Employment Attorneys Today
If your employer is enforcing arbitration on you and your coworkers, the experienced and dedicated employee rights advocates at Green Savits, LLC will fight to help get you the compensation you deserve.
We serve Florham Park and nearby areas of New Jersey. Call (973) 965-8571 today to schedule a consultation.