You may have heard of the current suit the Raiderette cheerleaders have filed against the Raiders due to low and withheld payments. However, thanks to forced arbitration, the cheerleaders might have to dispute the suit with none other than the commissioner of the National Football League, instead of in a court of law.
What’s forced arbitration you ask? According to the National Association of Consumer Advocates, forced arbitration allows companies to require consumers or employees to waive their rights to sue, file class action lawsuits, or appeal the decision makers’ rulings. Unlike regular arbitration, forced arbitration is mandatory and legally binding.
What’s more, the problem with forced arbitration is that individuals are, more often than not, unaware they’ve agreed to a forced arbitration. In addition, forced arbitration really limits a consumer’s choices for resolving a dispute. Arbitrators do not have to follow the same legal precedents judges do in a court of law, defendants cannot appeal decisions made by an arbitrator, and unlawful practices such as: discrimination, harassment, abuse, wrongful termination, negligence, or scams are not things an employee or consumer can sue for.
But it’s not just the Raiderettes who are dealing with arbitration issues. One arbitration study conducted by the Consumer Financial Protection Bureau (CFPB) has found that 9 out of 10 arbitration clauses block consumers from filing a class action lawsuit that are commonly used by credit card banks and checking account agreements.
Some of the highlights of the study also include:
- Bigger companies are more likely to use arbitration clauses
- Arbitration clauses are written in a more complex language than the rest of the contract
- Consumers rarely file arbitrations for disputes under $1,000
- Few consumers file a lawsuit in a small claims court to solve credit-card disputes
Forced arbitration “is something that’s been steadily rising over time,” said Rebecca Hamburg Cappy, Director of Alliance for Justice’s west coast office. “A big percentage of the workforce is required to sign a forced arbitration agreement.”
In fact, the National Employment Lawyers Association reports that between 15 to 20 percent of U.S. employers require a forced arbitration. This totals to up to as many as 30 million employees or a quarter of non-unionized employees.
Currently, there is a bill pending in Congress that would exclude forced arbitration in the workplace, antitrust, civil rights and consumer disputes. The Arbitration Fairness Act was sponsored by senator Al Franken (D-MN) in early May of 2013. The bill also states that “the validity and enforceability of an agreement to arbitrate shall be determined by a court, under federal law, rather than an arbitrator.”
“One of the main problems with forced arbitration is secrecy, the outcomes are confidential,” said Cappy. “If these cases are concluded behind the scenes, people are just not going to know when a company has behaved badly…It’s important for people to know that their rights are being taken away by these clauses and it’s important for Congress to consider passing the Arbitration Fairness Act to prevent any further spread.”