It has become an increasingly common practice for employers to include “arbitration clauses” in employee contracts. Often, workers are not informed that such an agreement waives their legal right to sue their employer, join a class action lawsuit, or file an appeal. You may have signed a contract effectively giving up your rights and not even known it.
Arbitration is a method of alternative dispute resolution, and a favorite among employers for several reasons. An arbitrator is more costly than a judge, and if an employee cannot afford to pay the fee, he or she simply does not get to present their case. The arbitration process places the employee at a disadvantage because an arbitrator is not appointed by a court, but selected by the employer. Furthermore, the outcome rests entirely on the decision of the arbitrator, and cannot be appealed. Because the arbitrator has complete control over the proceedings, he or she is free to limit or extend the amount of time during which a person can collect evidence and build a case. Typically, the compensation awarded in arbitration is significantly less than what the employee would have received from a judge or jury of peers.
These agreements not only prevent the dispute from entering court, but also prevent the employee from entering court in a class action lawsuit. Recently, the US Supreme court ruled in favor of expanding the use of forced arbitration in non-union workers and consumer contracts. These rulings have actually given more power to arbitrators, and made it even more difficult for wronged employees and injured consumers to hold big corporations responsible for violating their rights.
The Arbitration Fairness Act of 2011 has been introduced to counter the recent Supreme Court rulings. If passed, the Arbitration Fairness Act of 2011 would ban mandatory arbitration and give employees and consumers the power to decide whether to take their claim to court or settle it through a means of alternative dispute resolution.