Can Your Boss Force You into Arbitration?

The answer is yes.  And anyone who knows this should be deeply concerned about it.

Richard D. Alaniz, a senior partner at Alaniz and Schraeder, penned a very telling article for Accountingweb.com laying out the arguments why corporations should use arbitration agreements in employee contracts.  

There are many faults with this article, but most notably it provides a very rosy picture of arbitration and lacks any real perspective for employees.  

Arbitration, if agreed to fairly by both parties when a problem arises, can be an effective means of conflict resolution.  But too often, corporations slip clauses into the fine print of contracts that are already pages and pages long that force employees, consumers and patients into arbitration. 

Let’s look at the case Mr. Alaniz makes.

First, he states a very important fact about lawsuits; they can expose important information about corporate misconduct.  He cites this as a great reason for corporations to settle disputes out of court. 

Employee lawsuits hamper morale and could encourage other employees to follow with their own lawsuits. This kind of litigation can also expose information that companies would rather keep quiet. Additionally, such litigation can generate nasty PR. 

In a post Enron world, the last thing we need is less accountability for corporations. 

Mr. Alaniz also claims that arbitrators are neutral, but in the very next sentence he reveals a very telling fact; employers win more often in arbitration than when they are taken to court.  

Fortunately, employers can minimize many employee lawsuits and their fallout through arbitration agreements, where a neutral arbitrator hears the facts of the dispute and makes a binding ruling. A study by Alexander Colvin of Cornell University found that employers win more often in arbitration than in litigation…

Why? My guess is most arbitrators are not really neutral.  Arbitrators depend on corporations for repeat business and referrals, so there is a disincentive for any arbitrator to rule in favor of a consumer if they expect more work.

The most telling portion of this article comes in the section entitled, “The ABCs of Arbitration Agreements.”  

By signing arbitration agreements, employees typically waive their right to file lawsuits when they have a dispute with their employers.

Forced arbitration agreements take away the rights of employees.  

Employees have little, if any, leverage to alter an employee contract.  It is unrealistic to think that on your first day of work as a brand new employee you could simply ask your new employer to take out the arbitration agreement, if you even were given the time to find it in the pages and pages of forms you have to fill out and sign before beginning your formal employment.  Most, if not all, of these contracts are take it or leave it.  You must sign and agreed to everything it states or forgo the employment, service or product. 

Personally, this very candid article made my stomach turn, especially when Mr. Alaniz provides pointers on how to convince employees that these pesky little clauses are nothing to worry about.  He states:

Companies should not view arbitration as a way to limit the rights of employees to bring up issues or to be compensated if something goes wrong. 

Forced arbitration is a severe limit of your rights and they are rampant in most employee, consumer products and nursing home contracts.    

You can learn more about forced arbitration here