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More than Half of Workers Can’t Sue their Employers in the U.S.

Just in the last two years, Google, Facebook, Twitter, Microsoft, and Oracle have been hit with high-profile lawsuits over to their employment practices. And while those were the cases that made headlines, workers in nearly every sector sue their bosses for unpaid wages, discrimination and verbal and emotional abuse (to name just a few examples).

The right to sue over wrongful (and illegal) treatment at work is vital to maintaining bargaining power between employer and employee. And yet more than half of privately employed Americans—some 60 million people—have signed away this right. They are now beholden to a process known as arbitration.

Signing what is known as a “mandatory arbitration agreement” is voluntary in theory, but declining to do so can mean losing a job offer. Once signed, the agreement deprives the employee of the right to sue her employer in court for unfairly low pay, termination because of pregnancy, race-based discrimination, loss of paternity or maternity leave, and much more. In fact, legal claims filed under some of the strongest personal and workplace protection law in our country – Title VII of the Civil Rights Act, The Americans with Disabilities Act, The Family and Medical Leave Act, and the Fair Labor Standards Act – won’t ever see their day in court. Instead, those claims get pushed into a pre-written arbitration procedure. Since the worker has no say in how that procedure takes shape, these legal battles overwhelmingly end in the company’s favor. (Unionized workplaces differ: The labor-arbitration system used to resolve conflicts between unions and management is run, developed, and designed by both parties.)

According to a study published last month by Alexander Colvin of Cornell, more than half (54%) of private workplaces with non-unionized workforces have mandatory arbitration procedures. In bigger companies (with more than 1,000 workers), the rate jumps to 65%. By contrast, Colvin found that in 2003, only 14% of companies had arbitration agreements—and earlier studies from the early 1990s found that rate at or below 8%. No matter where you stand on the issue, it’s clear that asking employees to sign arbitration agreements has become far more common today.

Class-action lawsuits—where workers file a suit on behalf of themselves plus their coworkers—still tend to fall outside of mandatory arbitration. (The case against Google is class-action.) But even that could soon change. This very month, the US Supreme Court will consider whether arbitration agreements that include collective or class-action suits are legal. In National Labor Relations Board v. Murphy Oil USA, the NLRB argues that such agreements violate the National Labor Relations Act, which protects collective bargaining. The Supreme Court will also hear two more cases (Ernst & Young LLP v. Morris and Epic Systems v. Lewis) before ruling on the constitutionality of such agreements.

At the moment, 41% of employees who sign mandatory arbitration agreements also waive rights to bring a class-action lawsuit against that company. If the Supreme Court upholds the legality of such agreements, it’s likely that a lot more private workers will soon lose that right as well.

 

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Emery Reddy