Jake Darin | October 2, 2024
Saving Your Constitutional Right To A Day In Court: The Arbitration Fairness Act
Hunter Pyle Law | June 14, 2013
Imagine after months of unemployment (not hard to imagine these days), you survive a rigorous application and interviewing process to finally arrive at that climactic moment of landing a job. In your state of euphoria, and as day one as a perfect no-hassle employee. You hastily review and sign the standard new hire documents you’re given, knowing that there is nothing you could do about the content, anyways. You sign everything and vaguely hope you haven’t signed away the soul of your first born.
A while later, well after the new job excitement has worn off, you realize that maybe you should be getting paid for overtime, or maybe your supervisor should stop referring to you by a racial nickname. Maybe you complain about these new discoveries in your workplace, and are promptly fired.
No problem! You know you have rights. You contact an attorney with the intention of filing a lawsuit. Then you realize, those new hire documents you signed on day one have come back to haunt you. You’re informed that you signed an arbitration agreement and have to submit to binding arbitration. Binding arbitration with an arbitrator chosen (and paid) by your now nemesis.
In recent years, arbitration has become the subject of much debate, and much criticism from the civil rights and social justice communities. Employees under an arbitration agreement must argue their claims before a private arbitrator chosen by the defendant company. Further, arbitrators are not required to follow legal precedent, and in most cases, their decisions are final and not subject to appeal. Nan Aron, Arbitration Fairness Act would protect American consumers, The Reporter.com (5-12-2013). The risk of so-called “repeat player bias” is inherent to the system and inevitable; one recent study of top arbitrators found that they rule for the defendant companies over 90% of the time. Id.
In recognition of corporate abuse of arbitration agreements to strip employees of their labor rights, Senator Al Franken (D-Minn) and Representative Hank Johnson (D-GA) have introduced the Arbitration Fairness Act (“AFA”), S. 878, which would make forced arbitration clauses in civil rights, employment, antitrust and consumer dispute cases unenforceable. Specifically, the AFA amends the Federal Arbitration Act (FAA) by adding a new chapter that invalidates agreements that require the arbitration of these types of disputes, made before the dispute rises. This means that two parties could still agree to arbitration as a means to resolve their dispute after the dispute arises.
Groups supporting the AFA point out that it would also “restore Congressional intent, limiting the application of the Federal Arbitration Act (FAA) to disputes between commercial entities of generally similar sophistication and bargaining power.” Letter in Support of the Arbitration Fairness Act of 2013, S. 878.
The AFA is prompted by cases such as the infamous U.S. Supreme Court decision in AT&T Mobility, LLC v. Concepcion. In that case, the Court held that arbitration clauses could prevent consumers (and arguably employees) from filing class actions to enforce their rights against companies.
Employees are not the only group that stand to benefit from the passage of this law. Consumers are also often impacted by arbitration clauses they have agreed to inadvertently. Presently, many consumers are unknowingly subject to forced arbitration, compelled by the fine print on tickets or user terms (including, for example, passengers aboard the Carnival Cruise Lines ship Triumph and users of Instagram, to name only a couple).
Unfortunately, the bill has slim chances of being enacted; generally, only 12% of Senate bills made it past committee and only 2% were enacted in 2011–2013. Check the status of S. 878: Arbitration Fairness Act of 2013 here.
Those figures underscore the importance of getting involved and contacting your representatives in Congress to support this bill.