12/12/17 – Forced Arbitration

Forced arbitration clauses in both consumer and employment contracts are getting more scrutiny.

Here’s what’s happening behind the headlines.

Congress recently overturned a regulation that essentially banned forced arbitration in financial contracts between consumers and companies.  Perhaps you’ve seen the fine print in your credit card agreement. The consumer must participate in mandatory arbitration to settle a dispute instead of filing a lawsuit against the credit card company.

Opponents of mandatory arbitration argue consumers should be free to file suit or join a class-action lawsuit.

Unfortunately, some class-action lawsuits merely enrich trial lawyers with million-dollar paydays and give the plaintiffs – the damaged parties – settlements worth little or nothing.

Meanwhile, the Supreme Court is deliberating a case regarding forced arbitration provisions in employment contracts.

Because arbitration is a private matter there’s often a privacy clause that prohibits the employee from discussing the dispute.

Consider this potential consequence of privacy clauses.  Someone who’s a victim of sexual misconduct on the job may believe they’re the only victim – ignorant of others. Keeping resolution out of the courts and negotiations private can cover-up workplace sexual misconduct or other bad or discriminatory behavior.

Examples have recently become public where this may have been the case.

The Supreme Court may render its decision any day now.

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