Feb 10, 2021
Consumer and worker advocates on Thursday welcomed the re-introduction of legislation in the U.S. House that would eliminate what they say is effectively a "get-out-of-jail-free card" for corporations.
At issue are forced arbitration clauses, which may appear in fine print in a wide range of contracts such as those for employment, bank accounts, student loans, or cell phones. The clauses, critics argue, favor wrongdoing companies by preventing consumers or workers from having their day in court; instead the clauses mandate that disputes are resolved privately through a company-appointed arbitrator.
\u201cThe deck is stacked against those who bring civil rights, consumer, or employment claims against a corporation. Forced arbitration means no judge, no transparency and no rights. It\u2019s time to pass the #FAIRAct and #EndForcedArbitration.\u201d— NELP (@NELP) 1613062143
According to Rep. Hank Johnson (D-Ga.), who introduced the FAIR Act, the Forced Arbitration Injustice Repeal Act, with 155 co-sponsors, "Forced arbitration is an underhanded maneuver that corporations use to trick consumers, workers, and small businesses out of their right to go to court and seek damages from a jury of their peers."
"If this sounds unfair, it's because it is," he said in a statement.
"Big businesses that already have all the power in the relationship regularly stack the deck to avoid the only thing out there that could hold them accountable--the United States justice system," said Johnson.
Sen. Richard Blumenthal (D-Conn.), who introduced the Senate companion bill to the FAIR Act in 2019, is expected to reintroduce it in the Democrat-controlled upper chamber next week, according to a statement from the National Consumer Law Center (NCLC), one of dozens of organizations supporting the measure.
NCLC associate director Lauren Saunders, associate director of the National Consumer Law Center, welcomed the new legislation.
"Companies use fine-print forced arbitration clauses to deprive people of an impartial judge, forcing disputes into a biased, secretive, and lawless forum before arbitrators who do not have to follow the facts or the law, who are typically paid by the company, and where there is no right of appeal," she said in a statement.
The proposed legislation, Saunders added, "stops forced arbitration and restores access to the courts for survivors of sexual harassment, national guard members terminated from their jobs for serving their country, seniors in nursing homes, and consumers ripped off by Wall Street or predatory lenders."
According to Remington A. Gregg, counsel for civil justice and consumer rights at advocacy group Public Citizen, "There may be no more blatant example of how giant corporations like Wells Fargo, Equifax, Amazon, and Uber rig our economy than forced arbitration. Take-it-or-leave-it, fine print text requiring arbitration is hidden in most contracts as a get-out-of-jail-free card for companies that rip off, defraud, injure, cheat, discriminate against, harass, abuse, and violate the privacy of workers and consumers."
Gregg was one of those who submitted written testimony to a House panel hearing Thursday on the issue.
The House Judiciary's Subcommittee on Antitrust, Commercial, and Administrative Law also heard testimony from former Fox News anchor Gretchen Carlson, who in 2016 sued network chairman CEO Roger Ailes for sexual harassment.
In her remarks, Carlson pointed to her own experiences and those of women who suffered similar abuse and explained how forced arbitration silences women.
She said that "silencing is the harasser's best friend--and perpetuates the systemic problem of protecting predators and pushing women out of the workforce." Carlson, according to her prepared remarks, added:
I want you to just for a moment feel what it's like to find the courage to come forward. A woman finally decides to go to HR to complain--and if she has an arbitration clause-the reaction will be--phew! Good! "No one will ever know about this!" Her case is promptly thrown into the "secret chamber" of arbitration. Then the way we handle these things goes into effect. The woman will likely be blacklisted, demoted and fired from her job. In arbitration she'll find out there are limits on discovery and no appeals. There is no legal precent being set because none of it is actually taking place in a court. She may receive a paltry reward but in arbitration cases, employees only win less than 3% of the time. Meantime, large corporations with lots of complaints can keep an arbitrator paid for years. It's that repeat business thing. Wink wink. Our woman will never work again, and notably, no one at her place of employment will know what happened to her, and worst of all, her perpetrator will likely stay on the job--free to harass again and again. And so the cycle continues.
Public Justice executive director Paul Bland told the panel that passage of the FAIR Act would bring sweeping benefits.
Ending forced arbitration, Bland said, "may well be the single most unsung method advancing racial justice, public safety, gender equality, workers' rights, and economic fairness generally."
"The reintroduction of this bill is urgent in this moment," he said, "during a pandemic in which countless employers are treating essential workers as sacrificial, and nursing home negligence has led to massive infection, the ability of ordinary people to hold corporations accountable through the civil justice system is a life or death issue."
Tens of millions of Americans stand to benefit from the bill.
The Economic Policy Institute's Heidi Shierholz and Margaret Poydock noted in a statement: "As of 2017, 56.2% of private-sector nonunion workers were subjected to forced arbitration agreements and an EPI and Center on Popular Democracy analysis projects that by 2024, that share will rise to more than 80%. The FAIR Act is a crucial step toward ending the growing practice of forced arbitration."
"Congress must pass this critical piece of legislation," they said, "to ensure workers are able to enforce their rights and are not barred from bringing their employer to court."
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