Correction: A previous version of this article misstated the name of the Benjamin N. Cardozo School of Law at Yeshiva University.
On Tuesday, they testified before the House Judiciary Committee. All four women said they reported the behavior to someone at their company. All four women said they were retaliated against for speaking up. And all four women went through mandatory arbitration — an often confidential process that has, for many companies, become the primary way of handling employee disputes.
All four women said the process failed them.
Following the testimony, Afiniti’s board of directors announced that founder Zia Chishti, previously the company’s chairman, director and chief executive, had resigned, but “strongly disputes all accusations against him.” LVMH, in a statement to The Lily, wrote that the company “has clear policies prohibiting harassment and retaliation in the workplace and procedures to address any concerns raised, and they were followed.” And a lawyer for Ken Ganley Kia in Medina, Ohio, told the New York Times that “the dealership does not tolerate sexual harassment or retaliation against employees who report claims of sexual harassment.”
Mandatory arbitration, a process that requires employees and consumers to mediate their grievances with the company in a closed-door forum rather than go to court, is now the norm for many businesses, especially nonunion workplaces.
But more than four years after the #MeToo movement propelled a nationwide reckoning of sexual abuse in the workplace, critics of mandatory arbitration say it has protected toxic, abusive workplaces and the people who run them. Changing this particular process is crucial to making substantive strides on workplace harassment, they say.
Supporters of arbitration, meanwhile, claim that the process is a faster, less expensive alternative for workers than filing a lawsuit in court, and could be less intimidating. But workers rights groups and trial lawyers have long argued that the process isolates workers and leaves them at a major disadvantage in winning remedy or compensation from their employers.
In Congress, there is a bipartisan push to amend arbitration rules. On Wednesday, the House Judiciary Committee passed the Forced Arbitration Injustice Repeal (FAIR) Act, which would offer workers the option to resolve their complaints through arbitration or the courts. The Senate Judiciary Committee recently passed an identical version of the bill.
The bill would give workers with sexual abuse claims against their employers the choice to either go through arbitration or pursue their claims in court.
According to a 2018 report from Economic Policy Institute, a left-leaning think tank, around 60 million workers signed arbitration agreements, effectively barring them from accessing the courts. Legal experts say many of those workers may not know they have signed an arbitration agreement: They are often a condition of employment, with many workers signing them alongside benefits or human resources paperwork — after they’ve already accepted the job.
While some companies have rolled back these clauses (including Facebook, Google and Microsoft), they are so widespread that it’s challenging to find a nonunion company that doesn’t have this requirement, experts say. Up to 80 percent of Fortune 500 companies use forced arbitration, and they are especially common in low-wage industries and service work.
Alexander Colvin, dean of the Industrial and Labor Relations School at Cornell University, said that research doesn’t support arbitration supporters’ claims that it is less expensive than going to court for employees. A leading researcher of arbitration cases, Colvin co-wrote a widely cited 2015 EPI study that found median damages for arbitration cases were much lower than those filed in state and federal courts.
These low rewards are crucial, Colvin said: Because the process is complicated, it’s important employees have a lawyer to guide them. Most workers bringing cases against their companies can’t afford lawyer fees up front, so they have to rely on attorneys that take on cases based on getting an expected share of the winnings.
“But if the winnings aren’t there, the lawyer can’t take the case,” Colvin added. Workers were awarded money in just 1.6 percent of arbitration cases in 2020, the American Association for Justice reports.
On the other side of the table, employers tend to have established connections with arbitrators, because they would have used them before for previous cases, said Myriam Gilles, a law professor at the Benjamin N. Cardozo School of Law at Yeshiva University who gave expert testimony at Wednesday’s committee hearing.
“What’s really intimidating is going into a forum when your employer holds all the cards,” Gilles said. “You come in and you’re alone because you were never told that you could actually bring a lawyer. And the employer has a ton of lawyers there. ... Suddenly you realize this whole thing is rigged.”
This is compounded by the fact that arbitration procedures can vary greatly from company to company, with employers deciding what the process will look like. That in itself is a problem, Gilles said.
Under mandatory arbitration, workers also can’t join class-action lawsuits, which is particularly important for workers bringing forward complaints about a company’s culture, she said. (According to Colvin’s research, women and Black workers are most likely to be subject to forced arbitration, with low-wage workers being especially impacted.)
“Hostile work environments and many discrimination claims are only viable as a collective,” she said.
Because arbitration proceedings are secret (many require confidentiality or nondisclosure agreements from plaintiffs), survivors may not find out if there have been similar claims made about their employer in the past. But if they filed a lawsuit, this information would usually come out in the discovery process, Gilles said.
And unlike in court, if a survivor doesn’t agree with an arbitrator’s ruling or believes the arbitrator was unfair or biased, they can’t just appeal — they must try to get the decision vacated.
This is no easy task, said Jean Sternlight, a law professor at the University of Las Vegas’s Boyd School of Law: “It’s actually harder to get an arbitration decision vacated than it is to get a lower court’s legal decision reversed on appeal.”
While there is bipartisan agreement that the arbitration process needs to be fixed, there is some division about how best to do it.
During Wednesday’s hearing, Sarah Parshall Perry, a legal fellow at the conservative think tank the Heritage Foundation, said arbitration is not the issue — instead, she said, confidentiality clauses are.
Perry also argued survivors can push back against unfair arbitration hearings by reporting alleged crimes to law enforcement, or taking complaints to other public agencies. If more workers took their claims to court, Perry said, it would lead to longer, more expensive proceedings.
But simply making the arbitration cases public wouldn’t fix the bigger problems with the process, other legal experts said.
Gilles pointed out that some workplace harassment “doesn’t rise to the level of anything criminal.” The bigger issue, she said, is that forced arbitration effectively keeps survivors from accessing a constitutional right: the ability to have a trial by jury.
Sternlight agreed, saying that arbitration isn’t necessarily a problem; forced arbitration is. There is little individual employees can do to fight back against this process, she said. They could choose not to work for an employer who has mandatory arbitration, but “that’s putting a lot on employees to try to investigate an issue.”
Outside of organizing with other employees, the best hope to fix the process is through legislation, Sternlight said, by giving workers a choice between arbitration and going to court. Otherwise, many will remain silenced.
“One of the big impacts of arbitration is simply to discourage employees from filing a claim at all,” she said.
Until women are given a choice, companies will continue to shuttle claims into private arbitration, Gilles said. In doing so, they evade the kind of transparency and accountability many of them had pledged after the #MeToo movement made waves in 2017.
“Forced arbitration allows employers to shield serial predators from accountability,” Gilles said. “And when others in the workplace see that predatory behavior is not punished — indeed, may be even be rewarded — that contributes to a culture where powerful people act with impunity, because they have nothing to fear.”
