Forced arbitration clauses are eroding away our constitutional rights as consumers.
And the problem is getting more pervasive:
- American companies that include forced arbitration clauses and class action waivers in employment contracts increased to nearly 50 percent in 2018.
- Forced arbitration cases in the U.S. more than quadrupled between 2021 and 2022.
- Forced arbitration clauses, now used by a growing number of companies, prevent a wronged party from bringing a case to court and are now found in over 56% of employment contracts. Instead, the dispute must be settled in secret arbitrations, usually by an arbitrator chosen by the company.
The worst part? Forced arbitration hurts those who are already victims. The Jinks family wanted to sue their father’s memory care facility after he was viciously attacked while sleeping with the lid of a toilet seat by another resident. However, there was a hidden forced arbitration loophole in their father’s care contract.
Legal advocates estimate that as many as 90 percent of large nursing home chains in the U.S. now include arbitration agreements in their admissions contracts.
Vulnerable Citizens Are At Risk With No Legal Recourse
What makes this issue especially challenging is the dispute must be settled in secret arbitrations, usually by an arbitrator chosen by the company. This fine print prevents employees from suing companies in court for discrimination, sexual harassment, and even assault and prohibits victims from speaking publicly about their ordeals.
In sexual assault or harassment cases, these forced arbitration clauses can prevent harassers from facing public or legal consequences, opening the door for serial and long-term harassment.
The Equal Employment Opportunity Commission estimates that anywhere from 25% to 85% of women have experienced sexual harassment in the workplace. The number fluctuates because the Commission says up to 90% of abuse incidents go unreported. Many employees fear retaliation if they speak out, including losing their jobs.
In one famous example, former Fox News anchor Gretchen Carlson sued Fox News after she was fired for allegedly refusing sexual advances from company Chairman Roger Ailes. Fox tried to have her claims adjudicated in mandatory closed-door arbitration instead of court, effectively requiring that the details of her case remain hidden from the public. After Carlson came forward, many more women accused Ailes of sexual harassment.
What Has Changed to Combat Forced Arbitration Clauses?
In 2022, Congress passed and the President signed a groundbreaking bipartisan bill that banned employers from forcing workers to resolve sexual assault and harassment complaints using arbitration.
This law requires that prospective plaintiffs, not the defendants, choose whether to litigate their sexual assault or harassment claims in court or through arbitration. Individuals are no longer forced into arbitration even if they previously signed an agreement limiting their legal remedies to arbitration only. Also, employees may choose to bring suit individually or through a class-action lawsuit, regardless of whether the individual signed an agreement waiving their right to collective legal action.
While efforts to ban all forced arbitration clauses have failed so far, the 2022 bill helped open the door to banning the clauses in certain discrimination cases. A bipartisan bill called the Protecting Older Americans Act of 2023 has advanced in the U.S. House, calling for a ban on forced arbitration in cases that involve age discrimination.
The Fight For Your Legal Rights is Gaining Momentum
Forced arbitration finally being banned in sexual harassment and assault cases has allowed the issue to gain momentum. But the fight is far from over. In 2015, three out of four people surveyed by the Consumer Financial Protection Bureau (CFPB) did not know whether they had signed away their right to bring a lawsuit against a financial company. And that’s what the companies are counting on.
Be aware that they may, if they haven’t already, pop up in contracts with credit cards, cell phones, bank accounts, student loans, employment, nursing homes, home building, auto loans, healthcare providers, business franchises, cable and internet providers, and more.
If you’ve signed a forced arbitration agreement and want to know your rights, or wish to discuss specifics of your case in a free consultation with an experienced personal injury lawyer, please contact us today.