How Forced Arbitration Leaves Employees Helpless

Forced arbitration has become a common clause in agreements and contracts between employers and employees; however, most employees don’t realize it’s included and aren’t sure what it means. In the paragraphs below, we hope to clarify this important issue so that you receive fair treatment from your employer.

Arbitration can be a good way to settle issues between two parties, and sometimes people will voluntarily decide to arbitrate. The problem arises when one side is forced to arbitrate—when they don’t have the option to take a matter to court.

Arbitration is an alternative way of settling disputes between two parties. Instead of taking a case to court, both parties present their cases before an arbitrator or group of arbitrators. The arbitrator then comes to a decision based on the facts and arguments provided by each side.

Essentially, forced arbitration gives all the power to the employer. One reason for this is that the employer either chooses the arbitrator or they have a large amount of influence over who the arbitrator will be. A second reason is that employees cannot appeal an arbitrator’s decision. They are left victim to whatever ruling is made, which often doesn’t favor the employee.

A New York Times article further explains the corruption involved in forced arbitration this way:

Winners and losers are decided by a single arbitrator who is largely at liberty to determine how much evidence a plaintiff can present and how much the defense can withhold. To deliver favorable outcomes to companies, some arbitrators have twisted or outright disregarded the law, interviews and records show.

Most of the time, arbitrators will favor the employers or business. The reason for this is that the employer or business is the arbitrator’s client and often a repeat customer. Consequently, the arbitrator wants to keep that client happy to continue receiving business. In fact, according to studies done by Alliance for Justice and the Consumer Financial Protection Bureau, 93% of arbitration cases are won by businesses.

An article in Washington Monthly points out:

Consider, too, how the incentives on an arbitrator differ from those on judges. Judges are paid from public taxes; arbitrators are paid by whoever is retaining them. Sometimes both parties split the cost equally; often companies will offer to cover the entire thing. Either way, critics say the chance of repeat business can give arbitrators an incentive to rule in a company’s favor.

In addition to winning most of their cases, employers also gain further protection by putting these forced arbitration clauses into their agreements and contracts with employees. Another facet of the clause is that it prevents employees from suing their employers for things like sexual or racial discrimination, abuse, unequal pay or wrongful termination. The employee is left completely vulnerable to unfair treatment with no way of fighting back.

At this point, it’s very difficult to find employers who don’t include some type of forced arbitration clause in their contracts, so it has become almost impossible to avoid. Many organizations are lobbying to make forced arbitration clauses illegal as this is really the only way to eliminate it and avoid it completely.

Learn more about your rights as an employee and contact us for a free, no-risk consultation if you feel you’ve been treated unfairly. Let us help you get the fair treatment you deserve.

Further reading:

• Does Colorado Workers’ Compensation Cover All Injuries?
• What is OSHA and How Do they Protect Workers?
• Overview of Occupational Diseases and Injuries

**NOTE – this article and all content at Injurylawcolorado.com is for informational purposes only and does not constitute legal advice.