House Majority Leader Steny Hoyer spoking about Democrats’ record on job creation and the economy at the Center for American Progress Action Fund. (Photo Credit: Ralph Alswang, CC 2.0)

Washington DC is justifiably obsessed with the formal impeachment inquiry launched by House Democrats in response to a whistleblower complaint alleging that Donald Trump attempted to induce the President of Ukraine to provide him with damaging information about former Vice President Joe Biden, a leading contender for the Democratic Party’s presidential nomination. Impeachment is understandably dominating the national political conversation.

Still, there is some legislating being done in Washington, if only in the House of Representatives. On September 20, the House Democratic majority easily passed the Forced Arbitration Injustice Repeal Act (FAIR, in the on-the-nose naming convention popular in Congress), which would ban employers from forcing employees to sign mandatory arbitration clauses.

The FAIR Act is another piece of ambitious legislation approved by House Democrats, who have spent the first months of their new majority passing progressive legislation that’s dead on arrival in the Republican-controlled Senate. The FAIR Act seems likely to suffer the same fate as other legislation passed in the House, though some Republican Senators have expressed interest in the past in addressing mandatory arbitration clauses.

The Rise of Forced Arbitration

As everyone who has started a new job knows, the first day at the office is usually dominated by paperwork. New employees have to sign a lot of forms, and eventually they all blur together. And in 2019, there’s a very good chance that one of those forms will be a document that forces the employee to take any future legal challenges to arbitration and not a courtroom.

Mandatory arbitration clauses don’t just apply to employment situations – increasingly, companies are forcing consumers to sign away their right to sue as well.

And this is a relatively recent development. Driven by a string of Supreme Court decisions dating back to the early 1990’s, employers have been ramping up their use of mandatory arbitration clauses. In 1992, only two percent of workers were covered by mandatory arbitration clauses. As of 2017, that number had risen to 55 percent – approximately 60 million American workers.

This means that these 60 million Americans do not have the right to sue their employers if they suffer sexual harassment, racial discrimination or any other legal wrong to which an employees might be vulnerable. Instead, these employees must bring their grievances to a private arbitration panel.

There are two significant reasons this trend is so problematic. First, the employees who are most affected by mandatory arbitration clauses are lower income workers, usually women and people of color. White collar employees taking high-paying jobs in comfortable office settings have a certain amount of leverage when it comes to negotiating clauses like these – an African-American woman in desperate need of a minimum wage job at a fast food restaurant is much more vulnerable. Forced arbitration clauses, then, are perfect examples of the wealthiest and most powerful organizations in the country taking advantage of the nation’s most vulnerable populations.

Second, these private arbitration panels are systematically less friendly to plaintiffs than traditional lawsuits. A Cornell study found that employees won slightly more than 21 percent of employment arbitration cases administered by the American Arbitration Association, a figure significantly lower than in traditional litigation. In addition, employees who actually won at the arbitration hearings received significantly lower awards than those who prevailed at courtroom trials.

The FAIR Act’s Prospects

The FAIR Act passed mostly along party lines in the House, clearing that chamber by a 225-186 margin. Only two Democrats voted against the bill, while only two Republicans voted for it.

It’s probably safe to bet that the FAIR Act won’t pass the Senate or even receive a vote there – that’s been the fate of just about every piece of legislation passed by the House Democratic majority. It would certainly seem unlikely that the bill’s proponents could find the 13 Republicans necessary to break a filibuster in the Senate.

However, there are some signs that Senate Republicans might be willing to consider some kind of arbitration reform. The Senate Judiciary Committee, chaired by South Carolina Republican Lindsey Graham, held a hearing on the issue in April, and a handful of GOP Senators expressed disquiet at the status quo.

In the unlikely event the Senate takes up an arbitration reform bill, it would likely look much different than the FAIR Act. And with Congress seemingly poised to spend the next few months focused on impeachment, the odds of any sort of meaningful bi-partisan legislation making it to the President’s desk are long, at best.



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