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.
But there are a number of significant, often hidden disadvantages for employees signing such agreements. Arbitration forums show a statistical bias toward employers: Employees are less likely to win at arbitration than in court and, when they do prevail, often recover lower damages than they would at trial. Moreover, studies show that employers are more likely to win cases the more times they appear before a given arbitrator—meaning that repeat violators of discrimination laws are not only able to continue their unlawful practices without ever appearing in court but, over time, become increasingly likely to defeat employees who fight those practices. A 2011 Cornell study of nearly 4,000 employment arbitration cases found that employees bringing claims had a success rate of around 31 percent when the employer in question had defended only one case before a given arbitrator. When the company had had multiple cases before that arbitrator, however, the plaintiff success rate dropped by more than half.