Why forced arbitration policies are a huge red flag for women at work

Photo of woman signing a document
Photo of woman signing a document
Image: Getty Images / ljubaphoto
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Through protests and hashtags, women have recently been drawing attention to a seemingly obscure legal statue: forced arbitration.

Forced arbitration, also known as mandatory arbitration, prohibits workers from suing an employer if they experience sexual harassment on the job. If an employee does bring a lawsuit against their employer for sexual harassment, they don’t get a public hearing; instead, the company will hire a private arbitrator to resolve the dispute. Arbitration policies are often tacked on to on-boarding paperwork for many different kinds of jobs—white-collar and blue-collar jobs alike, in industries from tech to law, from media to finance—but not common outside the US.

These policies are often put in place to benefit the employer. Companies are more likely to win in arbitration than they are if a case is taken to state or federal court, one study found. That might be in part because these proceedings often lack the rigor or impartiality of a typical court case, as past evidence has shown. Arbitrators are typically not required to explain how they came to their final decision in a written document and these decisions are nearly impossible to appeal.

That often leaves the most vulnerable workers—those who are black, low-wage, or female, all of whom face a higher incidence of sexual harassment—at risk of being taken advantage of.

“Because arbitration is confidential, women don’t know that others are experiencing the same behaviors,” Rachel Arnow-Richman, an employment contracts professional at the University of Denver Law School tells Vice. “[Arbitration] prevents the public from seeing patterns amongst bad actors. It also prevents the development of the law in terms of precedent-setting and end-runs the public litigation process that could shine a spotlight on these experiences.”

Forced arbitration is not a new practice. It’s been around since 1925, when Congress passed the Federal Arbitration Act to guarantee that two corporations could respectfully arbitrate disputes. But since a game-changing Supreme Court ruling in 2011, it’s become much more popular. A 2018 study found that more than 60 million American employees are bound to forced arbitration contracts.

As the #MeToo movement has exposed abusers, so too has it exposed the ways companies protected them. So it’s not a surprise that the tide has started to turn against forced arbitration, in large part thanks to employees-activists. On Tuesday (Sept. 17), Shannon Coulter, president and founder of Grab Your Wallet Alliance, a nonprofit movement for boycotting products by the Tump family, announced the launch of Force The Issue, a project intended to get 900 publicly-traded companies to do away with their forced arbitration policies.

On Nov. 1, 2018, more than 20,000 Google employees walked out to protest the company’s pattern of unethical decision-making and forced arbitration practice. A New York Times investigation found that Andy Rubin, a top Google executive, received $90 million after an employee made a sexual assault allegation against him; because of confidentiality clauses, that was how even Google employees learned about it. They organized a walkout.

In response, the company ended its policy of requiring mandatory arbitration for sexual harassment cases a week later. Other top tech companies like Facebook, Square, Airbnb, eBay, Uber, and Lyft soon followed suit.

For their part, companies are realizing that forced arbitration can actually be bad for business in the long term, especially for companies against which employees often levy sexual harassment suits. One study found that companies that have pervasive sexual harassment lose $22,500 per employee per year due to staff turnover, low morale, and poor productivity.

Investors are losing patience with forced arbitration, too. When there is no access to information about sexual harassment cases, investors can’t know if a company provides a positive and inclusive environment for its employees, which can make profitability and positive shareholder returns hard to determine.

Nearly two years into the #MeToo movement, companies can no longer deny its power. Perhaps that’s why the system is finally making the changes the activists demand. Someday soon, it’s possible that forced arbitration clauses will be far more rare, ridding alleged abusers of one more protection.