American Rights at Work recently launched a campaign to highlight big business’s double-speak about arbitration. (h/t to AFL-CIO.) The campaign points out Corporate America’s differing views on arbitration in two bills: the Employee Free Choice Act (EFCA) and the Arbitration Fairness Act (AFA). In short, Big Business opposes the provision of EFCA that requires them to arbitrate disputes over contract negotiations (union arbitration). It also regularly extols the virtues of forcing consumers and employees to go to arbitration when they are hurt, swindled or discriminated against (forced arbitration), and opposes the AFA because it would end this practice. Stories about this arbitration hypocrisy popped up on blogs like Firedoglake and Huffington Post.
We actually agree with Big Business about one thing: forced arbitration and union arbitration are not the same. This becomes clear when you look at the two processes, and the differences illustrate why Corporate America favors one (forced arbitration) and opposes the other (union arbitration):
1. Who controls the process — In forced arbitration, the company writes the contract, makes the rules, and picks the arbitrator. In union arbitration, the Federal Mediation and Conciliation Service sets up an arbitration board to ensure that the process and the arbitrators are neutral.
2. The parties involved — Companies love to take individuals with no bargaining power to arbitration; they hate to arbitrate against larger parties who can bargain collectively. They also hate it when consumers or employees join together — either in class action lawsuits or class arbitration.
3. Timing — Arbitration under EFCA would happen before there’s a contract, to facilitate the bargaining process. Unfortunately for consumers and non-union employees, they never get the chance to bargain: forced arbitration is imposed on them when they sign up for goods and services, when they are least able to make an informed decision about whether it’s in their best interest.
Last week the U.S. Chamber of Commerce responded to the arbitration-related pressure by clarifying its position(s). Their letter to lawmakers misrepresents both the nature of forced arbitration (they claim it is only used to resolve only "factual disputes") and the practice’s history (far from being a "long-standing" practice, companies like the credit card industry have been using it against customers for about ten years).
All you really need to know to understand the Chamber’s position is this statement by Rep. Linda Sanchez:
“I do find it ironic that the Chamber supports arbitration in David v. Goliath cases: When it’s one individual against a large, savvy and well-heeled corporation. But when it is a group of workers banding together to achieve the power of numbers, the Chamber admonishes the idea.”