The National Employment Law Project (NELP) applauds Congressman Hank Johnson, along with 155 cosponsors, for introducing the Forced Arbitration Injustice Repeal (FAIR) Act of 2021. The FAIR Act would end corporations’ imposition of forced arbitration and class/collective action waivers in employment and civil rights cases, restoring the rights of workers to seek accountability from their employers for wage theft, racial discrimination, sexual harassment, and other wrongdoing. More than 60 million private-sector, nonunion workers who experience workplace violations like sexual harassment, racial discrimination, and wage theft are subject to forced arbitration and cannot bring their claims before a judge and jury, with Black workers (59.1%), women workers (57.6%), and low-paid workers (64.5%) the most impacted.
Corporations’ forced arbitration requirements and class/collective action waivers undermine compliance with employment laws that were designed by Congress to protect workers. Workers have power in the collective, and their ability to join together to fight back against their employers in court is a key workplace right that helps level the playing field when workers are harmed by powerful corporations. In fact, studies suggest that 98% of workers subject to forced arbitration do not actually bring their claim to arbitration at all, allowing corporations to effectively avoid liability entirely. Ending these one-way forced arbitration and class/collective action waivers that companies impose as a condition of getting and keeping a job is a critical economic justice and civil rights issue that Congress must address to ensure that all workers—and particularly Black, Latinx, and other workers of color—can reap the benefits of the laws Congress has passed to protect them.
The FAIR Act will push more employers to properly comply with existing federal and state wage-and-hour and discrimination laws by increasing the likelihood that companies will be held accountable for violations. The FAIR Act will also ensure that workers are empowered to enforce any future rights enacted by Congress, including but not limited to the right to a $15 minimum wage.
The FAIR Act is a racial and gender justice issue because labor market inequities and workplace violations fall most heavily on women, Black workers, and other workers of color. Forced arbitration and class/collective action waivers block workers from challenging these inequities and violations collectively before judges and juries, impacting women, Black workers, and other workers of color the most.
The proposed Raise the Wage Act provides a timely example of why passing the FAIR Act and ensuring workers can enforce any future rights matters for racial and gender justice. Occupational segregation has pushed far too many workers of color, and women in particular, into underpaid jobs and those in tip-earning industries. The FAIR Act will ensure that these workers are able to realize the promise of a higher minimum wage— helping decrease racial and gender wealth gaps—with Black women workers benefitting the most. The FAIR Act will also ensure workers can collectively challenge persistent sexual harassment and racial discrimination in the workplace.
NELP further applauds the U.S. House Judiciary Committee and Congressman David Cicilline for holding a subcommittee hearing today on the need to end forced arbitration.
Members of Congress should make clear to their constituents that they stand on the side of workers’ power to come together—and against wage theft and discrimination—by supporting the FAIR Act.
Background on Forced Arbitration and Class/Collective Action Waivers
- Companies increasingly impose arbitration on U.S. workers as a condition of employment, denying them the right to enforce their rights before a judge and jury when their employer breaks the law.
- More than 60 million private-sector, nonunion workers who experience workplace violations like sexual harassment, racial discrimination, and wage theft currently cannot bring their claims before a judge and jury, including 64.5% of workers earning less than $13/hour because of their employers’ required waivers.
- Black workers (59.1%) and women workers (57.6%) are the most likely to be subject to forced arbitration.
- Making matters worse, employers’ class/collective action waivers routinely incorporated into forced arbitration requirements prevent workers from banding together with their colleagues to challenge employer lawbreaking, whether in court or in arbitration.
- By 2024, it is projected that more than 80% of private-sector nonunion workers will be subject to forced arbitration and class/collective action waivers–meaning that unless policies like the FAIR Act are put in place to protect peoples’ rights, the vast majority of private-sector workers will be unable to enforce their rights under state and federal employment laws before judges and juries.
- Employers’ forced arbitration provisions don’t just channel claims to another forum – they suppress those claims. Faced with the reality of proceeding alone against their employer in a stacked forum, 98% of workers whose claims are subject to forced arbitration abandon their claims.
- For those few workers who do go to arbitration, they lose more often than before judges and juries. Even if they win, their recoveries are significantly lower than if a judge and jury heard their case. And because arbitrators are in business (unlike judges), they want to earn repeat business—meaning that repeat players (large corporations that use forced arbitration) have huge advantages over individual employees who are unlikely to need the services of an arbitrator again.
- Forced arbitration substantively harms workers by depriving them of their rights to recover stolen wages. NELP recently found that in 2019, $12.6 billion in wages was stolen from 6.25 million private-sector non-union workers earning less than $13 an hour who are subject to forced arbitration. Employers using forced arbitration requirements have effectively prevented these workers from ever recovering their stolen wages.
- Forced arbitration proceedings are generally conducted in secret and behind closed doors. Forced arbitration clauses also regularly incorporate confidentiality or non-disclosure requirements that prevent workers from speaking up about their claims to other workers or the public.
- Even if an arbitrator’s findings of fact or conclusions of law are flatly wrong, their decisions are virtually impossible to appeal. Arbitrators aren’t even required to issue a written decision explaining their conclusions. And because arbitration awards are typically strictly confidential, workers cannot even shine sunlight on arbitrators’ mistakes or their employers’ violations.
- During the last Congress, the FAIR Act passed the U.S. House of Representatives in September 2019 with bipartisan support.
