The Legal Loophole Big Companies Use to Cover Up Sexual Harassment

Uber whistleblower Susan Fowler exposed systemic sexual harassment, retaliation, and discrimination at the $70 billion tech giant — but because of an obscure clause written into the small print of her contract, she’ll never have the chance to take the company to court.

Fowler is one of many American workers who’ve been subject to harassment, discrimination, and abuse at work, only to be silenced by a forced arbitration agreement (also known as a “mandatory arbitration agreement”). The term may sound dull, innocuous, or legalistic. But mandatory arbitration agreements are a legal loophole widely used by companies to cover up sexual harassment and other workplace crimes — and #MeToo won’t succeed until we take them down.

Mandatory arbitration agreements, usually hidden in the legal small print of an employment contract, require workers to settle their disputes with a private “arbitrator,” instead of taking them to court to be heard by a judge and jury of their peers. Essentially: As a condition for a job, many workers are required to waive their constitutional right to sue if their workplace rights are violated.

It’s not just the tech industry, either. Nearly 60 million American workers, from the restaurant industry to prominent law firms, are subject to forced arbitration agreements. For decades, mandatory arbitration was limited to a narrow set of cases — but in 1991, the Supreme Court upheld the use of mandatory arbitration to resolve an employee’s civil rights claims—and it has metastasized since then. Today, more than half of private-sector nonunion employees are subject to mandatory employment arbitration, and barred from going to court to vindicate their rights if they’re sexually harassed, or paid less than minimum wage, or denied paid leave to take care of a newborn.

At their best, arbitration procedures can be a good alternative to a long, expensive lawsuit: the parties to a lawsuit would together choose a neutral arbitrator, like a retired judge, and present their cases. But mandatory arbitration rarely looks like that ideal. Workers don’t really choose to go to arbitration: if they don’t sign an arbitration contract, they’d put their jobs at risk. Instead, employers force people into arbitration because the secretive process is stacked against an employee who’s been harassed, in favor of the multibillion corporate empire that she works for.

A comprehensive analysis by the Economic Policy Institute found that, on average, employees win less often and receive “much lower damages in arbitration” than they do in court. Companies choose which private arbitrators to take claims to, which means those private arbitrators have a powerful incentive to keep big companies happy — and keep the paychecks coming — at the expense of workers who are harassed on the job or who see their tips stolen. When big companies repeatedly go back to the same arbitrators, an employee’s chances of winning a dispute drop dramatically.

Worst of all, mandatory arbitration can silence survivors and cover up rampant abuse. Unlike civil lawsuits, which play out in public, arbitration agreements are secretive, black-box procedures with little public oversight. Decisions are rarely published. Furthermore, employees are typically prohibited from speaking out about about both the workplace harassment and abuse and the arbitration process, so companies might secretly arbitrate dozens or even hundreds of discrimination claims every year with the public none the wiser. Thus, arbitration agreements have been used to quietly cover up high-profile sexual harassment allegations at Uber and Fox News. Most arbitration procedures usually require workers to bring claims individually, rather than in a class-action suit by people who’ve experienced similar forms of workplace abuse.

In other words, mandatory arbitration agreements literally prevent workers from saying #MeToo — and in a world where women are still rarely believed unless two or three or sixty of us all come forward together, that’s a powerful barrier to justice for women who are harassed at work.

Luckily there’s a fix, in the form of a bipartisan bill from Senators Kirsten Gillibrand (D-NY) and Lindsey Graham (R-SC), that would end mandatory arbitration in sexual harassment cases. The bill is such a no-brainer that the Attorney Generals of all 50 states and the District of Columbia wrote a joint letter to Congress calling for such legislation.

As for Susan Fowler, she introduced groundbreaking legislation in California to ban the use of mandatory arbitration not only for sexual harassment but for a wide range of workplaces abuses last month. Groups like the chamber of commerce are lining up to lobby against it — but my money’s on Fowler, a woman determined to never be silenced again.

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