More than half of American workers can’t sue their employer

This stays between us.
This stays between us.
Image: Unsplash/Steve Halama
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In the past two years, Google, Facebook, Twitter, Microsoft, and Oracle have faced various high-profile lawsuits related to their employment practices. And while those cases generated headlines, workers in almost every sector sue their bosses over emotional abuse, unpaid wages, and discrimination (to cite just a few examples).

The ability to sue over wrongful treatment at work is essential to the balance of bargaining power between employer and employee. Unfortunately, more than half of non-union, privately employed Americans—some 60 million people—have signed away this right. They are instead beholden to a process known as arbitration.

Signing a mandatory arbitration agreement is theoretically voluntary, but refusing to do so can cost a candidate their job offer. Once signed, the agreement strips the employee of the right to take her employer to court for unfairly low pay, termination because of pregnancy, race-based discrimination, loss of paternity or maternity leave, and much more. Any legal claims filed under Title VII of the Civil Rights Act, The Americans with Disabilities Act, The Family and Medical Leave Act, or the Fair Labor Standards Act won’t see their day in court. Instead, such claims are funneled through a pre-written arbitration procedure. Since the worker has no say in how that procedure takes shape, these legal battles often end in the company’s favor. (Unionized workplaces differ: The labor-arbitration system used to resolve conflicts between unions and management is run, developed, and designed by both parties.)

According to a study published this week by Alexander Colvin of Cornell, more than half (54%) of private, non-unionized workplaces have mandatory arbitration procedures. For larger companies (over 1,000 workers), that jumps to 65%. By contrast, in 2003 Colvin found that just 14% of companies had arbitration agreements—it’s worth noting that the 2003 study had differing methodology—and separate studies from the early 90s pegged that rate at or below 8%. While the comparison isn’t apples to apples, Colvin says it’s clear that asking employees to sign arbitration agreements is far more common today.

Class-action lawsuits—where an employee files a suit on behalf of herself and coworkers—still tend to fall outside of mandatory arbitration. (The case against Google is class-action.) But this could soon change, too. Next week, the US Supreme Court will decide whether arbitration agreements that include collective or class-action suits are legal. In National Labor Relations Board v. Murphy Oil USA, the NLRB argues that such agreements violate the National Labor Relations Act, which protects collective bargaining. The Supreme Court will also hear two more cases (Ernst & Young LLP v. Morris and Epic Systems v. Lewis) before ruling on the constitutionality of such agreements.

As it stands, 41% of employees who sign mandatory arbitration agreements also waive their right to file a class-action lawsuit. If the Supreme Court upholds the legality of such agreements, it’s likely that far more private workers will soon lose that right as well.