Mandatory Arbitration Goes Under the Microscope at SHRM Inclusion 2021
Author: David B. Weisenfeld, XpertHR Legal Editor
The Supreme Court has consistently upheld mandatory arbitration agreements as a condition of employment, and many employers make use of them. But speaking at the SHRM Inclusion 2021 Conference in Austin, Texas yesterday, former Fox News anchor Gretchen Carlson took aim at their usage as unfair.
"By 2024, 80% of corporate America will silence workers through arbitration, but the deck is stacked against employees," said Carlson. "Arbitrators are not a jury of your peers. It's mainly old white guys [retired judges and lawyers]."
She added that secrecy abounds with the process because mandatory arbitration agreements typically restrict sexual harassment victims from speaking out. "That's problematic when there is a predator in the workplace," said Carlson, who has led the charge out of the #MeToo movement to seek passage in Congress of the Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act (introduced in July).
SHRM's Chief of Staff Emily Dickens responded to Carlson by wondering if working to improve the arbitration process would be a better option. "Not everyone has easy access to litigation or knows a 'my Cousin Vinny' to help them," said Dickens, who also asserted that nobody is making an employee sign an arbitration agreement.
However, Carlson countered that there is nothing voluntary about these agreements. "It is forced," said Carlson. "There are 40 people behind them [the new employee] who will take the job if you don't sign."
Carlson's sexual harassment lawsuit against former Fox News CEO Roger Ailes pre-dated the #MeToo movement and led to a $20 million settlement in 2016. Ailes left Fox News with a $40 million severance package. Carlson could not sue the company directly because a contract she had signed mandated that any claims arising out of her employment had to be handled in arbitration rather than court. Carlson said she did not realize at the time that she was waiving her rights.
A few states, including California, have sought to ban or restrict mandatory arbitration agreements in recent years. The 9th Circuit recently upheld California's ban in large part, finding the Federal Arbitration Act (FAA) did not preempt the California law, AB 51.
But the US Supreme Court has strengthened the FAA in recent years. For instance, in the 2018 ruling inEpic Systems v. Lewis, the Court held that an employer can require employees as a condition of employment to enter into an arbitration agreement under which they waive their right to bring a collective action under the Fair Labor Standards Act as well as other employment laws.