More and more, employers are forcing workers to give up their constitutional rights to seek justice in our nation’s courts. Instead of seeing their day in court, workers may be sidelined into “arbitration.” This means a private individual or “arbitrator” can decide a civil litigation case outside of court, without a judge or jury. Arbitration agreements frequently contain blanket confidentiality provisions that require them to proceed in secret, while also denying workers access to crucial procedures that would permit them to join together in a class or collective action if their claims were brought in court.
Employers like to claim that arbitration is simpler, easier, and cheaper than going to court. In reality, they know arbitration can often seem like more trouble than it is worth for workers, especially low-wage workers whose individual damages may not be high. By forcing workers into separate, individual arbitrations, employers may believe they can prevent workers from vindicating their rights at all.
Some plaintiffs’ lawyers, however, have taken employers at their word and embraced the challenges presented by mandatory arbitration. The response of some corporations to being forced into actual arbitrations is telling.
Many employers have balked at the significant out-of-pocket costs they face in arbitration. Arbitration fees – which most arbitration agreements require the employer to pay – swiftly exceed the value of a low-wage worker’s claim, and the problem only multiplies when many workers have similar claims.
In one recent case, the arbitration fees for just three workers with similar claims exceeded $100,000, well more than the value of the workers’ claims (one worker only sought around $7,000 in unpaid wages).[1] The employer defaulted on paying the arbitration fees and tried to consolidate (join) the multiple cases and move them back into court – essentially demanding for its own convenience what it had previously attempted to deny its workers through arbitration. A lower court held, and the court of appeals agreed, that the bad faith of an employer who seeks to escape the consequences of its own arbitration agreement can be punished with a default judgment for a worker.
Companies like Uber and Lyft have faced the same problem on an exponentially larger scale, with thousands of drivers filing individual arbitrations after being forced out of court and denied the ability to pursue their legal claims together through a class or collective action, whether in court or in arbitration.[2]
Other recent cases[3] also suggest that courts do not look kindly on employers that try to evade the terms of their own arbitration agreements when they realize, too late, that the reality of arbitration presents significant challenges to employers as well.
If you think an arbitration agreement may be blocking you from obtaining justice for an employer’s wrongdoing, think again. You may still have recourse to pursue your claims. Sanford Heisler Sharp has experienced employment lawyers in New York, Washington, DC, Baltimore, San Francisco, San Diego, and Tennessee, who can assess the circumstances of your case.
Footnotes
[1] See Hernandez v. Acosta Tractors Inc., 898 F.3d 1301 (11th Cir. 2018).[2] See https://news.bloomberglaw.com/daily-labor-report/corporate-arbitration-tactic-backfires-as-claims-flood-in.[3] See, e.g., https://www.law.com/therecorder/2019/03/21/oracle-loses-bid-to-overturn-former-employees-motion-to-compel-arbitration/; https://www.law360.com/corporate/articles/1167988/vw-workers-get-narrowed-collective-ok-d-in-age-bias-suit.