Congress Introduced Legislation to Ban Forced Arbitration Clauses
Late last week, Rep. Hank Johnson (D-GA) and Sen. Richard Blumenthal (D-CT) introduced the Forced Arbitration Injustice Repeal (“FAIR”) Act, a bill that would end the harmful use of forced arbitration against workers, consumers, and small businesses.
Forced arbitration clauses, which are usually hidden in the fine print of “take-it-or-leave-it” agreements, are ubiquitous in contracts governing bank accounts, student loans, cell phones, employment, small business merchant accounts, and even nursing home admissions. These clauses deprive people of their right to seek justice in court before an impartial judge or jury.
The FAIR Act would not eliminate the option of allowing workers, consumers, and small businesses from agreeing to arbitration or other forms of alternative dispute resolution after a dispute has occurred. Rather, it would give them back the power to choose how they want to resolve a dispute.
The FAIR Act would correct a series of recent U.S. Supreme Court decisions that have expanded the reach of the Federal Arbitration Act much farther than Congress intended, and have given corporations greater power to force workers and consumers into arbitration. Arbitration has been used as a tool by big corporations to deprive workers and consumers of their rights and is inherently unfair. The proceedings are generally secret, may be biased in favor of the company because they tend to bring in repeat business, and include few rights to appeal. The arbitration rules could even include “loser pays” provisions, which deter people from bringing valid claims for fear that they will have to pay the opposing party if they lose the case.
Workers across the country are increasingly demanding that their companies remove these clauses from employment contracts. In late 2018, thousands of Google employees protested the company’s forced arbitration policy for sexual harassment and other mistreatment claims. Shortly after the employee walk-outs, Google announced that it would no longer force workers into arbitration for claims related to sexual harassment. Similar companies such as Facebook, Airbnb, and eBay announced similar plans. And, after continued advocacy by a broad coalition of organizations led by Public Citizen, Google announced last month that it would no longer force its workers into arbitration for any type of claim (although it still does require contract workers to bring claims in arbitration).
Public Citizen and dozens of consumer, worker, and civil rights organizations join a majority of both Democrats and Republicans in calling on Congress to quickly pass the FAIR ACT. According to a national survey, 84 % of the public supports federal legislation that ends the practice of forcing consumers and workers into arbitration. Surprisingly, Republicans support the legislation more than Democrats (87% to 83%).