What Gretchen Carlson and immigrant janitors have in common: forced arbitration
Gretchen Carlson is doing working Americans a real service by suing Roger Ailes, the CEO of Fox News, for sexual harassment. First, when a powerful, high profile CEO like Ailes is called out for disgusting behavior, it reminds workers and their bosses everywhere that women have a legal right to be treated with respect in the workplace.
Carlson is doing something else: she is boldly fighting the latest technique employers are using to avoid justice, to get away with sex or race discrimination, and to escape lawsuits for wage theft—putting binding arbitration clauses in employment contracts, which keeps cases out of the state and federal courts and push them into private dispute resolution systems that systematically favor employers.
Millions of working Americans are subject to arbitration clauses that they don’t even know about. More and more employers are forcing their employees, as a condition of being hired or of remaining employed, to waive the right to sue in a court if their employer violates the law. Workers must accept a process they often don’t understand, where the costs of seeking justice might be far higher even as their chances of winning or obtaining a just award of damages are reduced dramatically.
Comparison of outcomes of employment arbitration and litigation
|Mandatory employment arbitration (Colvin)||Federal court employment discrimination (Eisenberg and Hill)||State court non-civil rights (Eisenberg and Hill)|
|Mean time to trial (days)||361.5||709||723|
|Employee trial win rate||21.40%||36.40%||57%|
|Mean including zeros||$23,548||$143,497||$328,008|
Note: All damage amounts are converted to 2005 dollar amounts to facilitate comparison.
Source: The “Colvin” dataset draws on all employment arbitration cases based on employer-promulgated procedures administered by the American Arbitration Association from January 1, 2003, to December 31, 2007. Data are assembled by Colvin from reports filed by the AAA under California Code arbitration service provider reporting requirements. Alexander J.S. Colvin, “An Empirical Study of Employment Arbitration: Case Outcomes and Processes.”Journal of Empirical Legal Studies 8(1): 1–23 at 5 (2011). The “Eisenberg and Hill” litigation statistics are reported in Eisenberg, Theodore, and Elizabeth Hill “Arbitration and Litigation of Employment Claims: An Empirical Comparison.” Dispute Resolution Journal 58(4): 44–55 (2003).
Carlson’s contract with Fox News included an arbitration clause that not only denies her the right to go to court, it requires that she hold “all relevant allegations and events leading up to the arbitration… in strict confidence.” A gag agreement like that would normally mean that Fox executives could sexually harass female employees without the world ever learning about it—that employees could tell no one but the privately chosen arbitrator about their bosses’ humiliating and degrading actions or their retaliation for challenging those actions. It’s a recipe for protecting a culture of sex discrimination and abuse, but Carlson refused to play along. She has sued Roger Ailes directly, rather than Fox News, hoping to avoid both the arbitration clause and the gag order.
Unfortunately, the law is stacked against Carlson and every employee who challenges an arbitration clause in an employment contract: even in cases where the employee had no idea what the arbitration clause meant and where the entire employment contract was one-sided and abusive, judges find themselves compelled to enforce the clauses and deny access to the courts.
Simply put, many employees unwittingly sign away their legal rights. In a case decided last year by a federal court in Illinois, for example, immigrant janitors who could not read English signed a “franchise agreement” written in English that allowed them to purchase the right to clean several floors of offices in Chicago—but at a cost that left the immigrant workers unable to earn the minimum wage. It imposed an arbitration clause that they did not know about and did not understand, and that imposed two filing fees on them before they could go to arbitration, while denying them the right to seek punitive damages, consequential damages, loss of profits, or attorney fees and costs that would have been available if they prevailed in court. The immigrant workers would have to pay half the cost of hiring a mediator and half the cost of the arbitration, which could amount to $10,000 or more. And they couldn’t share the cost with other workers by filing a class action either in court or in arbitration. Each individual worker had to bear these expenses individually.
Despite the injustice of this contract, which borders on fraud and which the judge found to be “a contract of adhesion,” which means that the terms are “non-negotiable and presented in fine print language that the average consumer might not fully understand”,” the judge enforced the contract’s arbitration clause and dismissed the immigrants’ lawsuit.
Gretchen Carlson is likely to meet the same fate as the immigrant janitors in Chicago. But even so, by calling attention to the way her boss is using a legal device to avoid full liability for his alleged wrongdoing, she makes the rest of us more aware of what we give up when we willingly or unwillingly relinquish our access to the courts to remedy violations of laws designed to protect us in the workplace.
Tens of millions of workers have already lost the right to go to court when their employer wrongs them. The best way to reverse this trend is for Congress to ban pre-dispute arbitration clauses in employment contracts, which Sen. Al Franken’s Arbitration Fairness Act would do. Americans should not have to sign away their rights to hold a job.