Newsweek: Can Companies Force Workers to Go to Arbitration?

Last week, credit giant Equifax, after suffering a massive data breach, drew public fury for offering consumers an identity theft monitoring service­—but only if they signed away their right to join class action lawsuits against the company.

People were rightfully outraged—but soon the Supreme Court will decide whether your boss can to do the same thing to you.

Soon, the Supreme Court will hear Epic Systems Corp. v. Lewis —a landmark case to be decided with two other cases raising the same issue—to rule on whether employers can forbid class actions and force you into individual arbitration.

Most of us couldn’t say what an arbitration clause is, but they have become very popular among corporations and have grave consequences for workers. In the last 30 years, wealthy corporations have quietly rigged the rules against working people by burying forced arbitration clauses into routine paperwork.

How does this work? Let’s say it’s your first day at a new job, and you sign a stack of forms, or maybe a manual from human resources. Most of us don’t think twice about it; for the average American in need of a job, negotiating isn’t an option. But buried in the fine print is a forced arbitration clause that you have unknowingly signed.

These clauses take away your day in court should a dispute arise with your employer. Instead of a jury of your peers or an impartial judge, the decisionmaker in arbitration proceedings is often an individual hired by the company. The company also writes the rules—for example, deadlines, fees, and whether or not you’re on the hook for the company’s legal fees if you lose. And the decisions made in forced arbitration proceedings are final—meaning in most cases they can’t be appealed in a court of law.

Unsurprisingly, studies show that workers win less frequently and receive lower awards when they are forced to go to arbitration. Arbitrators have reported that they feel pressure to rule for the company—after all, it’s the company who signs the paychecks and decides whether the arbitrator is going to get hired again.

In a court where your opponent writes the rules and you can’t appeal the outcome, is it really court at all?

When Sheila Hobson—an employee at a Murphy Oil gas station in Calera, Alabama and a party in the upcoming Supreme Court case—realized she was getting ripped off by her employer, she decided to do something about it. Hobson joined together with three other Murphy Oil employees to sue the company, alleging that Murphy Oil had shorted them on overtime and forced them to work off the clock, in violation of federal law.

Hobson and her coworkers expected to have their day in court, but because Murphy Oil had made Hobson and the other workers sign forced arbitration clauses upon hiring, the company demanded that they drop their group complaint and enter into individual arbitrations. The workers demanded that they be able to bring their cases together—not in individual arbitrations—which set their case on the path to the Supreme Court.

The “individual” case requirement is key to seeing the real injustice behind forced arbitration. In the consumer context, this can mean that companies can effectively pick the pockets of thousands of customers, with no legal recourse.

When a credit card company steals $250 from each customer, it’s hard to imagine any one person spending hundreds of thousands of dollars to pursue an individual case. Likewise, individual workers like Ms. Hobson might not be owed much on an individual basis, making it difficult if not impossible for them to seek justice if they can’t join together with coworkers.

Class actions exist for this very reason, so that regular people can pool their small claims and get a lawyer to take the case. Without this option, companies are essentially free to steal millions of dollars—so long as they only steal a little from each person.

Like many of us, Hobson was starting a job and signed a few forms with fine print. Let’s hope that when the Supreme Court hears oral arguments on the case on October 2, the Justices will side with regular working people like Hobson, not with the big bosses and corporations who want to use the fine print to rig the rules against the rest of us.

Ceilidh Gao is a staff attorney with the National Employment Law Project.

This op-ed was originally published in Newsweek.

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