Death by Arbitration

Arbitration agreements have become widespread in California. Where you used to find them primarily in the consumer context, they’ve now taken over the workplace. Forced arbitration agreements limit an employee’s options when suing his employer to protect his rights. Under normal circumstances, an aggrieved employee could sue his employer in court in front of a judge and jury. When forced to arbitrate, the employee must bring his dispute with his employer to an arbitrator, who has the ultimate say in the case. Most notably, an employee does not have the right to appeal an unfavorable arbitration decision.

To make matters worse, arbitrators earn their money from repeat business. Employers, who are required to pay the arbitrators for their services, will find themselves defending future lawsuits and in repeat need of an arbitrator. This dynamic has drastic implications and is but one of the many problems with employment arbitrations.

With the flick of a pen, an employee also loses the right to have a jury of his peers hear and decide his case.  Juries are the cornerstone of our justice system, listening to and weighing evidence presented in open court. They also tend to give bigger awards than arbitrators. Whereas with a lawsuit filed at the courthouse, an arbitration is not public. Arbitrations take place behind closed doors and rulings made during these proceedings are not entered in the public record. As a result, arbitrators often go unchecked and change the rules of the game, debilitating employees.

The biggest problem with employment arbitration is that it is almost never consensual in the true sense of the word. Employers force employees to sign arbitration agreements when they are at their most vulnerable, that is unemployed and in need  of a paycheck. What’s worse is how employees are presented with these arbitration agreements. Usually, the employer provides a new employee with a stack of papers to sign alongside a lengthy employee handbook. If the employee wants to keep the job, he doesn’t have a choice but to sign every single page. For these reasons alone, it is not uncommon for employees to sign the paperwork without giving it a thorough read.

This year, Assemblyman Roger Hernandez authored much needed legislation seeking to restrict forced employment related arbitrations. Unfortunately, AB 465 was vetoed by Governor Brown this month and employees are the ones who suffer, while employers are given the upper hand. We must continue the fight against mandatory arbitrations which can only bring the inevitable death of employee rights and justice in the workplace.