LGBTQ Workers Are Winning Their Rights. But Because of Forced Arbitration, They Can’t Use Them.

LGBTQ workers have many milestones to celebrate this Pride Month. While more work lies ahead, twenty-one states and Washington, D.C. now explicitly protect against employment discrimination based on both sexual orientation and gender identity. And despite little movement on the federal Equality Acttwo federal circuits recently held that Title VII’s prohibition against discrimination on the basis of sex in employment already encompasses sexual orientation. The issue seems poised to reach the Supreme Court in the near future. 

Unfortunately, the discrimination protections LGBTQ advocates have fought for may be of little use to many workers, since the expansion of LGBTQ employment rights has coincided with workers’ diminishing access to the court system at the hands of forced arbitration. 

Since the 1980s LGBTQ rights have blossomed—but so have forced arbitration clauses

In the 1980s, Wisconsin and Massachusetts became the first two states to protect workers in the private sector against discrimination based on sexual orientation, followed by Connecticut and Hawaii in 1991. That same year, the Supreme Court ruled in Gilmer v. Interstate/Johnson Lane that the Federal Arbitration Act (FAA) mandated the enforcement of clauses in individual employment contracts requiring the submission of claims exclusively to arbitration, even for civil rights claims.  

Throughout the 1990s, a slow march of states added protections against employment discrimination based on sexual orientation. Then, in the early 2000s, a small wave of states such as California and Rhode Island also broadened protections to include gender identity.  

Roused by Gilmer, forced arbitration was also on the rise, though: The percentage of workers forced to sign contracts with arbitration clauses grew from a little over 2 percent in 1992 to nearly a quarter in the early 2000s. In 2001, the Supreme Court cemented Gilmer in Circuit City Stores, Inc. v. Adams, holding that the FAA’s exception for “contracts of employment” extended only to transportation workers. 

In the nearly two decades since, the country has witnessed a dramatic expansion of LGBTQ rights, including in employment. But so too for forced arbitration. A recent report from the Economic Policy Institute estimated that 60 million workers—that’s 56 percent of private-sector non-union employees—have now signed away their rights to go to court. 

Forced arbitration stacks the deck against LGBTQ workers

Forced arbitration stacks the deck against employees who try to bring discrimination claims. Unlike litigation, arbitration often lacks discovery that allows employees to access enough evidence for a viable claim and eliminates the procedural safeguard of trial by jury. An employer typically hand-picks an arbitrator, who is incentivized to rule in favor of the employer if she wants to be selected again in the future. 

Many arbitration clauses in employment contracts also contain class action waivers, which were upheld by the Supreme Court last month in Epic Systems v. Lewis. Class actions allow employees to pool costs and spread the risk of retaliation. Without them, employees who go through arbitration individually to allege discrimination not only have targets on their backs, but must represent themselves or pay their own legal costs.  

For LGBTQ employees, arbitration’s ascendance means that hard-won rights are at risk of becoming empty victories. Fortunately, there are steps that both employers and employees can take to restore them. 

Workers and employers can make legal rights real for LGBTQ workers

Employers that broadcast LGBTQ-friendly policies but require employees to sign contracts with arbitration clauses should swiftly drop them. The Human Rights Campaign’s 2018 Corporate Equality Index heralded the adoption of non-discrimination policies for sexual orientation by an impressive 91 percent of surveyed employers and for gender identity by 83 percent. But real support for LGBTQ rights also requires support for the vindication of those rights in court. 

LGBTQ employees should urge Congress to adopt not only the Equality Act, but also the Arbitration Fairness Act (AFA). The AFA would bar the enforceability of pre-dispute arbitration agreements in employment, civil rights, consumer, and antitrust disputes, correcting the Supreme Court’s ahistorical reading of the Federal Arbitration Act. In states where LGBTQ employment rights are on the books, advocates can urge lawmakers to experiment with innovative enforcement legislation that isn’t affected by forced arbitration. One example is California’s Labor Code Private Attorneys General Act, which enables employees to bring suits on behalf of the state against employers in violation of state law. Because the state is not a party to the employment contract with the forced arbitration clause, the suit is not prohibited. 

LGBTQ employees can also join with their coworkers to organize unions. A strong collective voice at work is the best way to make LGBTQ workers’ rights heard. If a workplace is unionized, employers also can’t unilaterally impose forced arbitration clauses. At the bargaining table and through fair grievance procedures, unions have been able to win pioneering victories for LGBTQ employees, often laying the groundwork for later statutory protections.

While the movement for LGBTQ employment rights must continue until workers are protected against discrimination in every state, the battle must not be confined to the fight for rights alone. Ending forced arbitration will ensure that LGBTQ workers can not only win their rights on paper, but also see them realized when it counts.  

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Jared Odessky

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