Arbitration Fairness Act Would Ban Mandatory Arbitration for Employees
The Arbitration Fairness Act of 2009 is pending in Congress and, if passed, would render mandatory arbitration clauses in employment contracts unenforceable.

January 01, 2010 /24-7PressRelease/ -- Arbitration Fairness Act Would Ban Mandatory Arbitration for Employees

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Increasingly employers are hiding binding mandatory arbitration clauses in the fine print of their employment contracts. Few people review the terms of their employment contracts carefully or understand what they are agreeing to when they sign standard paperwork at the beginning of new jobs. Even fewer new employees feel they can question or negotiate their terms of employment. Especially in these hard economic times, most will sign on whatever dotted lines are presented to them in order to get work.

Arbitration

An alternative to court, arbitration is a dispute resolution method wherein a neutral third party makes a binding decision in a disagreement. Originally meant as a voluntary alternative for opponents of equal stature, arbitration of legal disputes in the employment context is anything but voluntary. Often an employee has no idea that he or she signed away the right to take their employer to court until a dispute gets so serious he or she is ready to do so. Even for those who might recognize that they have signed a contract with an arbitration clause, few recognize the implications. Many employment lawyers with experience handling both jury trials and arbitration proceedings believe that jury trials generally result in more favorable outcomes for employees.

Arbitration Fairness Act

Introduced in both the U.S. House of Representatives and the Senate, the Arbitration Fairness Act of 2009 (AFA), if passed, would ban forced arbitration in employment, as well as in consumer, franchise and civil rights disputes. The Senate and House versions of the bill both exempt arbitration clauses in collective bargaining agreements, but the extent of this exemption varies between the two versions and will have to be worked out if the bill progresses.

Right to Trial

Supporters of the bill and critics of mandatory arbitration clauses point first to the constitutional right to a public trial. It goes against the grain for a powerful employer to be able to force an individual to give up his or her constitutional right to go to court as a condition of employment.

The proposed bill cites several Congressional findings in support of its mandatory arbitration clause ban:
-Federal arbitration law was meant to apply to legal conflicts between business concerns of equal resources and sophistication.
-Backed by U.S. Supreme Court holdings, many large corporations now force employees and consumers to give up their right to court trials.
-Employees are forced to forfeit and often do not understand that they are giving up their right to civil trials when they sign long, complex employment agreements with fine print.
-Private arbitrators hired by employers to conduct arbitration pursuant to these employment agreements are under pressure to please the corporate parties that repeatedly use their services, suggesting a real possibility of bias.
-Because arbitration decisions are not normally reviewed by courts, arbitrators may make decisions without regard to the law.
-Arbitration decisions are private with no public scrutiny.
-Corporations may include other related provisions in contracts -- provisions that can limit legal rights further or require the proceedings be held hundreds of miles away -- that make the mandatory arbitration requirement even more unfair to employees or consumers.

Halliburton

An extreme and horrific example of a forced mandatory arbitration clause gone awry is the case of Halliburton employee Jamie Leigh Jones. Sent to Iraq on a job assignment, Jones was drugged and brutally gang raped by co-employees. In response to her civil lawsuit, Halliburton claimed that she had given up her right to court trial by signing an employment agreement with a mandatory arbitration clause.

In testimony before the Senate Judiciary Committee in support of the AFA, Jones claimed she had signed the employment agreement without knowledge of the clause and because she needed the job. At the time she was only 20 years old with only a high school education. She testified further that after years of litigation, the court finally held that four of her legal claims related to the rape were not covered by the arbitration clause, but that the rest of her claims were, including her discrimination claim under federal civil rights law.

Advocates will be watching Congress closely for progress on the bill. In the meantime, anyone considering signing an employment agreement should have an experienced attorney review the terms first. Additionally, anyone with legal claims against his or her employer who is concerned that the lawsuit may be impeded by a mandatory arbitration clause should consult a knowledgeable employment lawyer for advice.

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