Articles Posted in Forced Arbitration

Published on:

Lev Craig

This month, New York State and New York City made groundbreaking expansions to the sexual harassment provisions of several state and city statutes and regulations, including the New York State Human Rights Law (NYSHRL), New York City Human Rights Law (NYCHRL), general business law, and civil practice law and rules. Some of the most important changes involve extending legal protections against sexual harassment to previously unprotected workers, including independent contractors and other non-employees; prohibiting mandatory arbitration of sexual harassment claims and non-disclosure provisions in sexual harassment settlement agreements; and requiring employers to provide sexual harassment training to employees.

As of April 12, 2018, the NYSHRL now protects all non-employees in New York State against workplace sexual harassment. Most other state employment discrimination statutes cover only employees, leaving most independent contractors (including models, actors, and other entertainers who are typically represented by agents), consultants, and other non-employees with few legal protections against workplace discrimination. The new changes to the NYSHRL, however, extend sexual harassment protections under state law to any “contractor, subcontractor, vendor, consultant or other person providing services pursuant to a contract in the workplace or who is an employee of such contractor, subcontractor, vendor, consultant or other person providing services pursuant to a contract in the workplace.” Under the NYSHRL, an employer is liable for sexual harassment of a non-employee if the employer knew (or should have known) about the harassment but did not take immediate and appropriate corrective action.

Published on:

Lev Craig

On December 19, 2017, Microsoft announced that it was eliminating forced arbitration agreements for employees making sexual harassment claims and voiced its support for a recently proposed bill—the Ending Forced Arbitration of Sexual Harassment Act of 2017—that would make such agreements unlawful in many workplaces. The announcement makes Microsoft one of the first major corporations to eradicate mandatory arbitration agreements, which are at present nearly ubiquitous in the landscape of employment discrimination and harassment claims.

Earlier this year, we reported on the increasing prevalence of mandatory employment arbitration agreements, which approximately 55 percent of U.S. workers are now subject to, according to a recent Economic Policy Institute report. On its face, an arbitration agreement simply requires an employee to handle future discrimination and harassment claims in a private forum, rather than in court, and many employees don’t think twice about signing such agreements in the stack of onboarding documents they receive from HR at a new job.

Published on:

Edgar M. Rivera, Esq.

Arbitration between employees and employers favors employers’ interests at employees’ expense. Ostensibly, arbitration merely requires that any employment claims be litigated in a private forum; in reality, it discourages employees from suing their employers because, as compared to litigation, employees are less likely to win and generally recover lower damages. As such, many employers require their employees to sign arbitration agreements.

Indeed, a report from the Economic Policy Institute has found that, since the early 2000s, the number of workers subject to mandatory arbitration has more than doubled, covering 60 million U.S. private-sector non-union workers. These agreements prevent 55 percent of U.S. workers from accessing the courts to protect their employment rights.  This figure increases to 65.1 percent among large companies—those with 1,000 or more employees.  Of the employers who require mandatory arbitration, 30.1 percent also include class action waivers in their procedures—meaning that about 25 million employees also lose the right to address widespread employment rights violations through class action.  For large companies, the number of employees subject to class action waivers increases to 41.1 percent. In total, 23.1 percent of private-sector non-union employees no longer have the right to bring or participate in a class action against their employers.

Published on:

Edgar M. Rivera, Esq.

Arbitration agreements between employees and employers often strongly favor the employer’s interests at the employee’s expense. As a result, an unsuccessful opposition to a motion to compel arbitration can be disastrous to a plaintiff’s case. Although a commercial case, the Tenth Circuit’s recent decision in Ragab v. Howard is relevant for plaintiffs and may help defeat a motion to compel arbitration.

In Ragab, the Tenth Circuit affirmed the District Court of Colorado’s denial of Ultegra Financial, its CEO Muhammad Howard, and Clive Funding, Inc.’s motion to compel arbitration.  There were six agreements between plaintiff Sami Ragab and defendants Ultegra and Clive Funding relevant to Ragab’s claims. The agreements contained clear but conflicting arbitration provisions, including conflicts regarding the essential terms of any arbitration, like which rules would govern and how the parties would select the arbitrator. The Circuit Court found that these conflicts between essential terms demonstrated that the parties did not have a meeting of the minds and, therefore, there was no actual agreement to arbitrate.

Published on:

On May 5, 2014, the New York State Assembly passed legislation forbidding the State from contracting with any business that requires employees to arbitrate claims arising from violations of Title VII of the Civil Rights Act. Should this bill win the support of the State Senate and be signed into law by Governor Cuomo, New York State would be taking a step in the right direction, towards fair employment conditions for workers and away from forced arbitration.

Forced employment arbitration clauses require American employees to sign away their fundamental right to a trial by jury; countless workers do so without even knowing what rights they are giving away. Many employers require employees to sign overarching employee handbooks, and within that handbook is a short clause stating that the employee has agreed to arbitrate any legal issues that may arise out of the course of his or her employment. Consequentially, when an employee is discriminated against, wrongfully terminated, or otherwise injured by their employer, the employee has lost the ability to take the employer to court, and instead must submit to arbitration.

The federal government began favoring arbitration in 1925, with the passage of the Federal Arbitration Act. At that time, arbitration was typically used to settle disputes between two parties of equal bargaining power. Over the last few decades, however, courts have expanded the application of the FAA to validate agreements between parties of vastly different bargaining power – such as employers and employees – entered into before any dispute exists. Typically, when faced with such an agreement, a worker has only two choices: agree to it, or find another job. Given those options, the worker really has no choice at all but to agree to sign away their rights.

Contact Information