Employee Rights Under Siege as Arbitration Clauses Proliferate



After Sheila Hobson and three other assistant managers were denied overtime pay while working at Murphy Oil, they filed a class action complaint. But because the workers had signed employment agreements that contained arbitration clauses, Alabama Northern District Judge C. Lynwood Smith Jr. ordered the plaintiffs to submit their individual claims to arbitration.

According to a 2018 Economic Policy Institute study, 60 million American workers are barred from litigating employment claims in traditional civil court because they have signed away their rights. The study further found that mandatory arbitration is especially widespread in California, Texas and North Carolina.

“Employees often sign without even realizing it because the employer puts a stack of paperwork in front of them during new-hire orientation and the arbitration agreement is just one in a pile of forms to sign,” said Lisa Milam-Perez, J.D., and senior legal analyst with Wolters Kluwer Legal & Regulatory.

Another unsuccessful federal claim, filed in Wisconsin Western District Court, involved technical writer Jacob Lewis, who was employed by Epic Systems Corp. In her dismissal of Lewis v. Epic Systems Corporation, Judge Barbara Crabb noted the arbitration agreement was short and written in clear, understandable language.

“Plaintiff does not say he was confused by the email or the terms of the agreement or that he needed more time or information about the agreement before he could make an informed choice about whether to accept the agreement and continue his employment,” wrote Judge Crabb.

Most recently, the U.S. Supreme Court settled the issue once and for all when it reversed the National Labor Relations Board (NLRB) rulings that invalidated mandatory arbitration agreements with class action waivers, which means that employment agreements containing arbitration provisions are enforceable under federal law.

“The Supreme Court took a narrower view of what that National Labor Relations (NLRA) provision means and concluded that it did not mean the right to bring class action lawsuits in court or to arbitrate an employment dispute as a class,” Ms. Milam-Perez told PacerMonitor News.

As a result, employers can mandate arbitration agreements as a condition of employment and employees are obligated to proceed individually in arbitration court, where there’s no chance of a jury. Workers can, however, attempt to negotiate for a neutral arbitrator who plays the role of a traditional civil court judge or a panel of arbitrators before they sign an employer agreement.

“Arbitrators complete a disclosure form before accepting a case to determine if there is a conflict of interest,” said Angela Reddock-Wright, a Los Angeles-based employment attorney.


So, what should employees do? Below are seven questions to ask before signing:

1.Where does the question of arbitrability rest?

The Supreme Court has determined that employers can require employees to submit certain types of disputes to arbitration, which include discrimination, harassment and wage claims. But if the question of arbitrability of a particular claim rests in traditional civil court, you’ll be able to avoid what happened to Lauren Bonner, who sued Point72 Asset Management under the Equal Pay Act for allegedly acting like a boys only club. Federal judge Analisa Torres granted Point72 Asset Management’s Motion to Compel to Arbitration, noting that Ms. Bonner’s employment agreement with Point72, “clearly and unmistakably delegates the question of arbitrability to the arbitrator.”

2. Do I need an attorney?

It is advisable to enlist legal representation even in arbitration. There are contingency attorneys who will agree to be paid after the plaintiff wins a judgment issued by the arbitrator, according to Ms. Reddock-Wright, who also works as an arbitrator with the American Arbitration Association (AAA).

3. How much does arbitration cost?

Because you are without the benefit of the same level of potential damages that you might be awarded in a civil court proceeding, negotiate for an arbitration agreement that allows for all the protections of civil court, such as discovery, and that the employer pay the cost and fees of arbitration.

4. If my former employer pays the arbitration agency, how can there be a fair and equitable outcome?

Research the arbitration organization designated in the employer agreement. There’s the AAA, which is a not-for-profit provider of arbitration services, while JAMS is a private arbitration provider founded by the late Judge Warren Knight. If at all possible, request language in the employer agreement that allows you to finally approve which arbitrator is selected at the designated organization.

5. Is your agreement to arbitrate fair and conscionable?

Document when in doubt about whether the arbitration clause in your employer agreement is fair and conscionable. In Lewis v. Epic Systems, Judge Cobb noted that the plaintiff did not raise concerns before signing.

“Defendant’s email gave him [Lewis] the option of having defendant [Epic Systems] contact him to answer questions but he failed to choose that option,” Judge Cobb ruled.

6. Can I appeal the arbitrator’s judgment?

In traditional civil court, litigants have an automatic right to appeal a judgment within a specified time frame. In arbitration, there is no automatic right to appeal at any time. “Most arbitration decisions are considered final unless the employee can show substantial injustice or a misuse of power in the arbitration process,” Ms. Reddock-Wright told PacerMonitor News.

7. How do employer arbitration agreements impact applicants in search of work?

A job seeker hoping to avoid mandatory arbitration now faces increasingly limited employment options. In some cases, the employer’s online job application includes an arbitration clause amidst numerous other provisions and the applicant selects “agree’” with little forethought when submitting their resume. “Freelancers and independent contractors can also be subject to mandatory arbitration,” said Ms. Milam-Perez.


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