Student groups at Yale, Stanford, and other schools will stop promoting jobs at firms that use mandatory arbitration.
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Female student groups at prominent US law schools are cutting ties with law firms that force employees to sign away their right to sue over sexual harassment and other forms of discrimination.
About a dozen student organizations that represent women released a statement Monday saying they will stop accepting funding from these firms, and will no longer promote these firms to members as future employers, or “in any way.” Women’s law associations at Yale, Stanford, the University of Pennsylvania, the University of Chicago, Cornell, New York University, and the University of California Berkeley are among those who signed the statement.
The move is a sharp rebuke of the controversial practice of mandatory arbitration, in which employers force workers to waive their right to sue the company for potentially violating the law, whether it’s related to sexual harassment, racial discrimination, stealing their wages, or anything else.
Instead, employees must take their claims to private arbitration, a quasi-legal forum with no judge, no jury, and nearly zero government oversight. Under this secretive process, workers are less likely to win their cases. And when they do win, they tend to get much less money than they would in court.
Law students are now joining other groups in pushing back against this practice, which affects millions of workers in nearly every US industry. Last month, law students at Harvard helped pressure the world’s largest law firm, Kirkland & Ellis LLP, to drop its mandatory arbitration policy for the lawyers who work there (though non-lawyers at the company are still subject to it).
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Board members at the women’s law groups who issued the joint statement on Monday said they want to pressure more law firms to do the same.
“We are eager to use our tenure to publicly disavow employers whose policies structurally disadvantage the labor force’s most vulnerable employees, including women, people of color, gender non-conforming individuals, individuals with disabilities, and the LGBTQ+ community,” they wrote in their statement.
The statement sends a powerful message to law firms, which rely heavily on these student groups to recruit female lawyers and summer associates. It also brings much-needed attention to the impact of mandatory arbitration, not just on women and people of color but on workers of all professions and backgrounds.
Millions of US workers are now barred from the court system
About half of all non-unionized workers at US companies are subject to these agreements, according to the Economic Policy Institute, which is more than double the share of workers in the early 2000s. Some of America’s most well-known companies, including Walmart, Starbucks, Macy’s, Uber, Google, and McDonald’s, now require all or some of their workers to sign arbitration agreements. (Full disclosure: Vox Media does too.)
This has made it nearly impossible for many workers to seek legal justice for wage theft, overtime violations, and job discrimination. And in the wake of a recent Supreme Court ruling that allows employers to prohibit class-action claims from workers in arbitration, companies have even more incentive to add arbitration clauses to their employment contracts.
Mandatory arbitration was once limited to contract disputes between businesses, but now it also extends to legal disputes with consumers and employees.
The widespread use of arbitration clauses in the workplace came after a crucial 2001 Supreme Court ruling involving sexual harassment.
In that case, Circuit City Stores Inc. v. Adams, a salesperson working at a California Circuit City store sued the company for sexual harassment. The employee, Saint Clair Adams, said his co-workers harassed him because he was gay. But Adams, like all other Circuit City employees, had signed an agreement to resolve all disputes with the company through private arbitration. Circuit City argued in federal court that Adams had to move his claim to arbitration.
The judge sided with Adams, arguing that the Federal Arbitration Act — which allows businesses to resolve contract disputes through arbitration — has a provision excluding employment contracts. The ruling was upheld by the Ninth Circuit Court of Appeals.
But Circuit City took the case to the Supreme Court, where the justices overturned the lower court’s ruling, allowing businesses to extend arbitration to nearly all employment contracts.
The justices, in their 5-4 opinion, created a very narrow interpretation of the employment exclusion in the Federal Arbitration Act. It came down to this line of the act: “but nothing herein contained shall apply to contracts of employment of seamen, railroad employees, or any other class of workers engaged in interstate or foreign commerce.”
The justices decided that this clause limited the exemption “to transportation workers.” In other words, only workers in the transportation industry were exempt from these mandatory agreements; all other workers could be forced to take their claims to arbitration.
In May 2018, the Supreme Court handed businesses another win in a 5-4 decision in Epic Systems Corp. v. Lewis. The court said it’s also legal for US employers to prohibit workers from joining together to sue the company over discrimination, wage theft, and other workplace violations. Now workers who sign arbitration clauses with class-action waivers can only file claims individually through private arbitration.
That means that a US worker’s effort to seek legal justice, or to force a company to change working conditions, is even more difficult.
Mandatory arbitration is particularly bad for women and workers of color
When women began to come forward to describe rampant sexual harassment at companies like Fox News and the Weinstein Company in 2017, many realized that they could not seek legal justice in the courts because they had signed mandatory arbitration agreements.
Former Fox News anchor Gretchen Carlson was one of them. She had sued former Fox News CEO Roger Ailes for sexual harassment in 2016, and they settled for an undisclosed amount. But Carlson could not sue Fox News for the company’s role in allowing the sexual harassment to persist, and neither could dozens of other women who accused the media company of tolerating sexual harassment, had they decided they wanted to sue.
Mandatory arbitration also disproportionately harms worker of color. It means that they can never sue an employer for racial discrimination or any other labor dispute. Instead of taking their case to a jury of their peers, they must make their case to a panel of arbitrators, who are often white men, and may have a harder time identifying potential discrimination. (Hip-hop artist Jay-Z has some thoughts on this too.)
As more workers speak up about discrimination in the workplace, many of them are pressuring members of Congress to restrict or abolish arbitration clauses from US workplaces.
In October 2017, Rep. Beto O’Rourke (D-TX) introduced the Mandatory Arbitration Transparency Act, which prohibits businesses from including a confidentiality clause in their arbitration agreements related to discrimination claims.
In December, a bipartisan group of senators and representatives introduced the Ending Forced Arbitration of Sexual Harassment Act, which exempts sexual harassment cases from required arbitration.
On February 12, all 56 state attorneys general (including those in five US territories) weighed in, urging congressional leaders to vote on the bills. In their letter, they said that forcing sexual harassment cases to go to arbitration perpetuates the “culture of silence that protects perpetrators at the cost of their victims.” They also questioned the process itself:
While there may be benefits to arbitration provisions in other contexts, they do not extend to sexual harassment claims. Victims of such serious misconduct should not be constrained to pursue relief from decision makers who are not trained as judges, are not qualified to act as courts of law, and are not positioned to ensure that such victims are accorded both procedural and substantive due process.
Then in March, Sen. Richard Blumenthal (D-CT) and a group of Senate Democrats proposed a bolder idea: Don’t let businesses force employees and consumers to take their claims to arbitration.
Their bill, the Arbitration Fairness Act, would let workers and consumers decide where to pursue their legal claims. But so far, Republican leaders in Congress have ignored these proposals.
A new bill from House Democrats, the Restoring Justice for Workers Act, goes even further for workers, by also prohibiting employers from banning class-action claims (it does not, however, include a ban on arbitration clauses for consumer claims).
Until Congress decides to revisit the issue of mandatory arbitration, it makes sense for law students across the United States to get involved. Privatizing the court system this way directly impacts their profession and the ability to seek legal remedies for future clients. It also impacts their individual careers should they go work at these firms, considering that employers often use private arbitration to bury widespread misconduct.
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