Ramya Ramachanderan – The strength of the #MeToo movement across the world has seen interesting developments in law and social consciousness of sexual harassment in the workplace. A highlight in these debates has been the use of mandatory arbitration clauses in employment contracts that prevent employees from filing suit in a court. These clauses are “forced” on employees in the sense that employees have no bargaining power to negotiate. The clauses are also notorious for preventing employees from congregating into a class to raise collective actions against employers.
The Supreme Court of the United States granted motions for divided argument by the U.S. Solicitor General and the National Labor Relations Board in the trio of consolidated cases to be heard by the Court involving mandatory arbitration clauses.[1] The Court was asked to determine whether mandatory workplace arbitration clauses banning class actions violate federal labor laws. The three cases before the Court pose other interesting questions on the intersection of the Federal Arbitration Act and the National Labor Relations Act.
But perhaps, the more troubling question that is being raised is the issue of using arbitration in employment contracts altogether. As a refresher, a contract is formed only upon the meeting of the minds. This means that two parties come together to create an arrangement with both of their voluntary consent. The element of voluntary consent is also a central pillar to arbitration, which has a long-standing history in the United States.[2] It is the emphasis on voluntary consent that has led to growing interest in arbitration as a method of dispute resolution. The idea of a “forced” or a “mandatory” arbitration stands in complete opposition to the importance placed on voluntary consent.
We must concede that employees who sign the mandatory clause have somehow given their consent to it. But we must also acknowledge that inserting arbitration clauses in contracts between unequal negotiators lacks the voluntariness that is so central to arbitration. Inadvertently, the mandatory arbitration clauses largely affect female employees whose legal recourse to sexual harassment claims prevents them from going to court.[3]
While arbitration certainly is an important dispute resolution tool for large companies intending to keep away from lengthy lawsuits, it cannot supplant the necessity of requiring actual consent that is voluntary. This is exactly why it is important to question the very legality of forced arbitration clauses: because they are rid of the bargaining and negotiation process that an arbitration clause itself necessitates. Corporations usually have employees sign the contract without the employee having any ability to negotiate the dispute resolution clause. It prevents the ability of employees to initiate a collective action as a class against the employer—a practice increasingly being remedied by corporations.[4]
With a view to end the increasing abuse of arbitration clauses in employment contracts, two inter-connected solutions are highlighted. One, is for companies to step up and end the secrecy surrounding sexual harassment claims.[5] The other, is for the government to assume a rather paternalistic role and legislate to prevent corporations from forcing employees into arbitrations to resolve claims of sexual harassment. The recent move by the state of California by introducing a bill in its legislature to end forced arbitration has received mixed responses.[6]
Whatever the conclusion we seek to draw from either solution, the real question the legal community in arbitration must ask is one that invokes one of the foundational pillars of arbitration itself—whether a forced consent obtained by a complete absence of negotiation is still consent sufficient to give life to an arbitration clause.
[1] Amy Howe, Argument Preview: Reconciling Class Waivers and the National Labor Relations Act (UPDATED), SCOTUSBlog (Sept. 25, 2017), http://www.scotusblog.com/2017/09/argument-preview-reconciling-class-waivers-national-labor-relations-act/.
[2] See Steven A. Certilman, This is a Brief History of Arbitration in the United States, 3(1) NYSBA New York Dispute Res. Lawyer (2010) (giving a quick history of arbitration in the United States).
[3] See Kevin Truong, New California Bill Could Open the Floodgates for Legal Action Against Employers, San Francisco Business Times (Apr. 26, 2018), https://www.bizjournals.com/sanfrancisco/news/2018/04/26/new-bill-could-open-legal-floodgates-employers.html; see also Julia Carpenter, The Ways Companies Silence Women at Work, CNN Money (Apr. 18, 2018), http://money.cnn.com/2018/04/18/pf/forced-arbitration-sexual-harassment/index.html.
[4] See generally Susan Fowler, I Wrote the Uber Memo. This is How to End Sexual Harassment, New York Times (Apr. 12, 2018), https://www.nytimes.com/2018/04/12/opinion/metoo-susan-fowler-forced-arbitration.html.
[5] See Nick Wingfield & Jessica Silver-Greenberg, Microsoft Moves to End Secrecy in Sexual Harassment Claims, New York Times (Dec. 19, 2017), https://www.nytimes.com/2017/12/19/technology/microsoft-sexual-harassment-arbitration.html.
[6] See generally Margot Roosevelt, Should California workers be able to sue their bosses? #MeToo says “Yes!”, Orange County Register (Apr. 23, 2018), https://www.ocregister.com/2018/04/23/the-metoo-push-could-lead-to-limits-on-binding-arbitration-in-california/.
