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Why You Should Care About Employment Arbitration Agreements
Two years ago I never dreamed I’d pursue legal action against my employer. Like many people that seemed ridiculous — who am I to fight against a corporation in America? Besides, I was passionate about what I did, I was excellent in my role and I was driven towards a goal of climbing the corporate ladder all the way to c-suite.
Sadly — that woman from August 2022 had no idea she was less than 2 months from a battle that would flip her world upside down and shatter her sense of self so thoroughly that she would be a different person entirely by the time she emerged.
One of the most devastating moments in my personal fight? Learning what an employment arbitration agreement is and that I had signed one. It was devastating to learn too late, after I had already started to fight back, that my civil rights were far less protected than I ever imagined.
It's impossible for me to know if I would have taken different steps had I known from the beginning, so I do the one thing I can do - warn others.
To start, a few key organizations you need to know
Equal Employment Opportunity Commission (EEOC): The federal agency that enforces civil rights laws to protect employees against workplace discrimination. The EEOC was created as part of Civil Rights Act of 1964 and investigates discrimination complaints based on: Race, Color, National origin, Religion, Sex (including sexual orientation, pregnancy and gender identity, Age, Disability and Retaliation stemming from raising complaints about the above
American Arbitration Association (AAA): The largest non-profit organization providing employment arbitration services in the United States, including for employee disputes.
JAMS: The largest private, for-profit organization providing employment arbitration services in the United States, including for employee disputes.
What is a forced / mandatory employment arbitration agreement?
It is an agreement that is signed by an employee as a condition of their employment (usually as part of their new hire paperwork). The agreement typically states both employer and employee agree to settle any and all disputes through arbitration rather than through the court system.
How is arbitration used to limit employee’s rights?
If disagreements arise with your employer these agreements may be used to legally deny employees the following legal protections:
The right to a court trial: Your case will not be decided by a judge or jury
The right to class-action lawsuits: Protects the company from the consequences of inflicting widespread damage if any individual employee’s claim is not large enough to stand on its own (e.g. the company steals $1,000 from 100,000 employees. As a class, finding an attorney would be easy as the damages amount to ~$100M+, but finding an attorney to take an individual $1000 case? Good luck.)
The right to recover through agencies who were created to protect your legal rights as an employee: Whether or not it is enforceable is a different matter, but some companies include language that indicate you will not be able to recover even if a government agency like the Equal Employment Opportunity Commission or National Labor Relations Board finds the company at fault for violating your civil rights. My lawyer informed me this is not enforceable, but even if that is true, you'll need to consult with a lawyer if you want to fight it in court.
The right to appeal: Arbitration is legal and binding. This is especially problematic given that data has shown some arbitrators are repeatedly used by a company because they almost exclusively rule in the company's favor.
A Complete Discovery Process: Often discovery for both sides is far more limited in arbitration compared to court cases
A fair fight: Arbitration disproportionately favors employers compared to litigation outcomes.
What’s so wrong with arbitration?
In addition to the concerns I’ve already listed about the disparity in outcomes with frequently used arbitrators, arbitrators and arbitration organizations are not federally regulated.
As a result, there is no set criteria for becoming an arbitrator and unlike judges they do not need to have a legal background or degree.
This means that an arbitrator who makes a legally binding ruling to decide if an employee’s constitutionally protected civil rights were violated may not even have a legal degree or experience.
Don’t believe me? You can review any of these websites to see what the requirements are:
However, that's not the only concern.
Approximately 1/3 of JAMS arbitrators have an ownership share in JAMS itself.
Why does this matter? Because companies often specify which arbitration service will be used in their arbitration agreements and logically, they choose the service they prefer. What would make an employer prefer a specific arbitration service, well it’s not much of a stretch to assume they prefer the service where they’re most likely to win.
Most disappointing is this wouldn’t have been discovered or exposed if City Beverages hadn’t uncovered the conflict following their arbitration loss against Monster Energy. Unfortunately, the average employee won’t have the legal resources available to even search for a conflict of interest and even if they found one on their own, they’d still need to find a lawyer willing to fight the case. If interested, you can read more about this specific case here.
Need a lawyer to help you with your case?
With JustiProof we'll help you compare your claims to previous EEOC cases, identify what discrimination violations you've faced based on your description of events and build a case that helps you quickly and clearly relay the facts of your case to legal representatives you're seeking help from.
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