Employers are opting increasingly for forced arbitration as a tool to prevent their employees from seeking justice against them in court. A form of private dispute resolution, an effective arbitration agreement forces the parties to submit their dispute to a professional arbitrator (usually chosen by the employer), who will decide the result. The arbitrator’s decision is final: It is legally binding and cannot be appealed in court.
The Problem with Forced Arbitration
Forced arbitration comes at a tremendous cost to employees, who will no longer have their day in court. As a result, their right to fair treatment on the job is inevitably compromised. Even a favorable monetary arbitration award can feel like a hollow victory for an employee who has suffered years of discrimination at the hands of their employer. For a large company in particular, even a high six-figure payout is effectively nothing but a slap on the wrist. A license to continue their unfair employment practices.
An employee’s real bargaining power comes from the public nature of the court system. By signing mandatory arbitration contracts, employees are waiving their fundamental, constitutional right to a trial by a jury.
According to a recent study, nearly 52% of employees are subject to mandatory arbitration procedures. “Extrapolating to the overall workforce, this means that 60.1 million American workers no longer have access to the courts to protect their legal employment rights and instead must go to arbitration.” Alexander J.S. Colvin, Economic Policy Institute, EPI.org.
Workers’ Rights Put at Risk
Just a few weeks ago, the Supreme Court ruled 5-4 in NLRB v. Murphy, that employers can include employment contract clauses forcing employees to arbitrate their disputes individually, and waiving the right to resolve those disputes through joint legal proceedings. In a rambling, logically incoherent majority opinion, Justice Gorsuch asserted, “[t]he policy may be debatable but the law is clear: Congress has instructed that arbitration agreements like those before us must be enforced as written.”
This decision paves the way for companies to strip workers of the right to pursue class action suits in cases of widespread discrimination. In her written dissent, Justice Ginsberg cautioned, “[t]he inevitable result of today’s decision will be the underenforcement of federal and state statutes designed to advance the well-being of vulnerable workers.”
Savvy employers are well aware of the advantages provided to them by private arbitration. They are becoming ever more creative in finding places to bury mandatory employment arbitration clauses to ensure that their employees are bound by them.
The Supreme Court’s decision in the Murphy case left unanswered, the question of what constitutes valid “notice” to an employee.
Consider the case of an employer who sends an arbitration agreement through a company-wide email, requiring any employee who does not agree to be bound by mandatory arbitration to opt out proactively. Are all employees who have not opted out of the agreement still bound by its terms, even if they never opened the employer’s email?
In another case, the employing company placed a mandatory arbitration clause within the text of the legal disclaimers included in its employment application. In order even to be considered for a position, a potential employee is required to find and agree to mandatory arbitration.
Fighting Workplace Discrimination
The Supreme Court’s decision in NLRB v. Murphy will have significant consequences for the ability of employees to fight back against discrimination on the job. Despite the unequal bargaining power inherent in employer-employee agreements, the decision marks a victory for companies seeking to avoid liability for the mistreatment of their employees.
It remains to be seen how the court will handle the issue of hidden arbitration clauses, whether long-standing contract principles requiring notice to both parties will become a thing of the past as well.
The following companies use forced arbitration clauses: Morgan Stanley, Hooters, Forever 21, Nordstrom, Neiman Marcus, Macy’s, Yahoo, Dillard’s, Manpower, Carrols, Papa John’s Pizza, Xerox, Amazon, Ford, GE, Coca-Cola, CVS, ExxonMobil, Bridgewater Associates, Glencore, RBS, Barclays, Tradeweb, Boehringer Ingelheim Pharmaceuticals.
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We all build relationships based on trust. Some relationships require more trust than others. For example, marriage, medical professionals and hiring lawyers. We all take the time to explore whether these relationships are the right fit for us. We even memorialize these important, sometimes life-changing, relationships with contractual agreements. But when it comes to the relationship with your employer, you might as well start hand feeding piranhas.
Meet Your Antagonist: Your Employer
An antagonist is someone who actively opposes or is hostile to another; an adversary. Does this describe your current or former employer? In my role as the employment attorney, I do not hear very many people say they trust their employers. In fact, the opposite is true. According to a Harvard Business Review article, “In both your personal life and your work life, you’re bound to encounter people who take advantage of you, and these painful experiences can make you cynical.”
You have several reasons to be cynical about your employment relationship. Your employer is not interested in whether you are happy at work, fulfilled in your career aspirations, concerned about your personal responsibilities at work or anything remotely realistic to a nurturing relationship. In fact many employees have a low level of trust in their employers. The 2016 Trust Barometer report from Edelman revealed that a third of employees do not trust their employers. Employees reported a lack of engagement, short term profit seeking, lack of belief in the company mission, poor product quality, unethical behavior, bad corporate reputation, invisible CEOs and lack of corporate communication to employees.
At-will Employment is Bad for You
When you are employed at-will, as most of you are, you might as well be on a first date for the next several years. You would think that after knowing your employer for three or more years, you’d just settle down and get engaged to be married. However this is not so. Unless you have a coveted and rare employment contract with a “for cause” termination provision, your employer can bounce you with little or no notice. Many of you have felt this scorned feeling from prior jobs. So where is the trust in the at-will workplace if you can never predict your future with a reasonable certainty on a day-to-day basis? There is none. Ouch!
Somehow, we have just grown accustomed to this dysfunctional at-will relationship and let employers manipulate us with unenforced corporate codes of conduct, lofty corporate double speak and fear.
Management by Fear Does Not Create Trust
The most common corporate management practice today is to maintain a consistent level of passive-aggressive practices which propagate employee fear and insecurity. From my vantage point, I see a persistent pattern by employers accusing employees of subjective performance issues while their objective performance criteria are “meets” or “exceeds expectation”. Employers use performance management techniques such as performance improvement plans and coaching to force out undesirable employees. No one ever remains long after being managed this way. I also see cases of overt ruthless conduct, where a supervisor discriminates against pregnant employees as having “baby brain.” Saying things like, “I don’t want another woman working on the desk” or “If you’re being honest with yourself, do you really think you could do this job?” And the comments get even worse. “I don’t want to hear any complaining from you, you and [spouse] did this to yourselves.” Only a supervisor with intentions to rid themselves of pregnant employees will make discriminatory statements like this to push the employee to quit out of fear of reprisal.
Discrimination Does Not Create Trust
The absence of trust becomes more noticeable when employees experience discrimination in the workplace or need to take time off due to health issues affecting themselves or a family member. For these employees, their career with their particular employer has taken an abrupt turn for the worse.
For example, you become pregnant while employed and take a maternity/paternity leave under company policy and FMLA. When you return, your job duties have changed and so has the person you reported to. Pregnancy discrimination is one of the most perverse examples of a lack of trust an employee can encounter. The employer has a maternity leave policy and you take a leave under said policy with no resistance. However, upon returning to work you face pregnancy discrimination when your employment is terminated. The employer will jump at an opportunity to replace you rather than reinstate you. We would all agree, this is not an ideal trust building experience at any company, yet pregnancy discrimination continues to persist.
If you complain to your employer about issues of discrimination or whistle blowing, you will immediately cause your employer not to trust you. You have a legal and moral right to complain about these issues, but do not expect reciprocation from your employer. You just threw yourself off or under the company bus. This equals your spouse cheating on you and then pointing the finger at you as the cause for why they had the affair. Your employer’s Human Resources Department will not help you when you are down and have complaints about coworkers or your supervisor. I am sure the folks in HR are nice people, but their “job” is to protect the employer, not you! Don’t make the mistake in confiding with human resource personnel, unless absolutely necessary to build a case for retaliation.
Arbitration and Noncompete Agreements Don’t Create Trust
Arbitration and non-competition agreements and employer trust are like oil and water with a sprinkling of gasoline for added flare. The U.S. Supreme Court’s further endorsement of employer arbitration agreements cemented in stone the future of employee litigation and the permanent role of arbitration in your career. Listen, don’t be fooled, arbitration agreements are bad for you, your rights, your claims, the economy and are only good for employers. Noncompetition agreements are even a better example of a lack of employer trust. When your employer is finished with you and terminates your employment, they sink a big fishing hook in you and reel you back in at their whim each time you land a new position. The employer cries foul, complaining you are single handedly destroying the company via working for the competitor. These two forms of employment agreements represent the worst in every company that mandates them. An arbitration agreement is a tool to conceal bad corporate acts from employment attorneys like myself and non-competition agreements are used to threaten competitive employers in the market place.
Rise Up and Demand More Trust
It is time to call an end to bad corporate practices- the deceit, the greed, the lies and the double speak. Employees should demand more from their employers. Rise up and unite together and tell your employer you would trust them only if they demonstrated trust to you first. Trust begets trust.
Have questions or think you’ve been discriminated against at work? Let our employment law attorney’s help you get justice. Get in touch today!
[Picture Attributed to the NYTimes]
On Sunday, September 10, 2017, the New York Times published an article captioned as “Bridgewater’s Ray Dalio Spreads His Gospel of ‘Radical Transparency'”. The article purports to be a fuller examination of Dalio’s social experiment at Bridgewater Associates in comparison to similar articles by the New York Times. The above article appears on the eve of his September 19, 2017 publication of Principles: Life & Work. In the article, I was quoted as stating, “[t]his whole transparency and truth-seeking thing is juxtaposed with the fact that they intentionally secretize all interactions with employees from public view.”
I enjoy taking issue with Dalio’s principles and the adverse personal impact they have had on employees at Bridgewater Associates. From my vantage point, I can see exactly what takes place inside the organization, including the fallout from poor, arbitrary, discriminatory and self-minded management decisions. Yes, Bridgewater is transparent to …an employment attorney like myself.
Can’t Get In Synch- Your Fired!
Frankly, I cannot take Principles seriously given the ample contradictory evidence I have seen. For example, Principle 20 is titled “Constantly Get In Synch”. I have repeatedly read accounts that this principle is used to throw other employees under the bus. Employees are too quick to hear the other side and grade others as “not getting in synch”, resulting in a negative score in their personnel file. Under the same umbrella, Principle 26 states “recognize that conflicts are essential for great relationships because they are the means by which people determine whether their principles are aligned and resolve their differences.” I have seen cases where Bridgewater has used this principle to deter employees from making legitimate discriminatory complaints regarding their own employment, only to be terminated shortly thereafter. I have seen legitimate discrimination cases where Bridgewater took no action to resolve them internally before the conflict erupted into a legal dispute, or maybe that was the intended result. This result conflicts with Principle 25 which states “Recognize that getting in synch is a two-way responsibility”. I have only seen employees who have felt the brunt of the one-way communication policy that exists at Bridgewater, which becomes even narrower when employees escalate to management when they “can’t get in synch”. Principle 36 states “If you can’t understand or reconcile points of view with someone else, agree on a third party to provide guidance. This person could be your manager or another agreed-upon, believable person or group who can resolve the conflict objectively, fairly, and sensibly. This mechanism is a key element of our culture and crucial for maintaining a meritocracy of ideas.” Honestly, the only objective and believable person in the conflicts brought to my attention was ….well me! If your manager is discriminating against you, please don’t believe that management at Bridgewater will take your side. You will be tossed to the curb without notice under the accusation that your refused to “cross-over” to the other side or you weren’t a “believable” person.
Trust in Truth is Misinformation
“Trust in Truth” is the number one principle at Bridgewater, but nothing could be further from the truth. Dalio states “being truthful, and letting others be truthful with you, allows you to explore your own thoughts and exposes you to the feedback that is essential for your learning” (Principle 2) and “openness leads to truth and trust.” (Principle 4). If these three laudable values are uniformly and consistently followed by the company, then the following practices violate all of them. Bridgewater uses confidentiality and arbitration agreements to quell anyone from expressing the truth about what internally occurs at this company. Any employee leaving the company for any reason is forced to sign a one-sided settlement agreement that contains a confidentiality provision. The company demands such confidentiality in exchange for severance pay, settlement money, releases from noncompetition agreements or to receive profit sharing payments, no different than any other company. Dalio and the company should be openly transparent with the public about internal employee complaints, not shield them forever in confidential settlement agreements and in private arbitration filings. This is especially true when Bridgewater is the fiduciary of public funds. How can “we” the public trust in Dalio’s truth when “we” are not being given the full weight of the evidence to decide for ourselves; we can’t and we are not in synch! More important, how can “we” confirm that employee feedback was taken seriously and the company learned from its own mistakes? As long as there is no openness, there is no trust among “we the people”.
If you believe in the natural order of things in the environment, nature will take care of itself all on its own. When mankind introduces unnatural externalities into the orderly flow of evolution, fundamental changes develop that alter the natural order in nature. Take honey bees and Bridgewater Associates for example, each have been infected with a chemical or unnatural pathogen that is slowing destroying them; don’t mess with Mother Nature.
Honey Bees and Neonicotinoids
I raise honey bees at my home, caring for about 10 hives each year. Bees are a bewildering microcosm of chaos but in reality they are a highly efficient hierarchical system of organized labor supporting their beloved queen bee. Honey bees function just fine left alone. They will raise their brood into worker and drone bees. In this culture the females run the show and everything turns out sweet as honey. By the way Drone (male) bees serve only one limited purpose, to help the queen produce more bees. There is no talking, complaining or rating systems among the employees, just a system of chemical pheromones and directional dances that make the hive hum and maintain an adequate balance sheet of honey food stores which my neighbors and I enjoy. Honey bees are born with a coded instinct to get along, just like employees (i.e. the golden rule). Then enters MAN, who seeks to disrupt the natural order of bees with a new language and culture. To yield more crop production and make lawns green as the emerald isle of Ireland, man introduces chemicals that interfere with the language, culture and natural order of bees. Please stop using pesticides on your lawn. Not only are pesticides slowing killing you, they are deadly to honey bees and other pollinators. No bees, no food, no you! Learn a new vocabulary word- Neonicotinoids. Connecticut and the European Union is moving to completely ban this epidemic use of the chemical, which has been proven to cause colony collapse in bees. I can personally attest that Neonicotinoids kill bees, I lost 20-30 hives in the past three years because my fellow citizens treat their lawns with this chemical. I hope for a better future and continue to raise bees.
“Principles” Are Not Working at Bridgewater Associates
Then there is Bridgewater Associates, located less than three miles from my office. I am not saying the company ever used pesticides on employees, but maybe they used a psychosocial pathogen to infect their culture, aka “The Principles”. The company and its founder have introduced an unnatural externality into the work place previously never seen in the working world. With the introduction of a new language and culture, which I comically refer to as “Newspeak”*, the company’s founder Ray seeks to re-order the natural order of human interaction at work- impacting 1500 employees at its’ two campuses in Westport, Connecticut. The company’s Newspeak presumes we are weak and dysfunctional and we need to be fixed. Bridgewater Associate employees must reconcile themselves with the founder and leader “Ray”, who is on a self-promotional advertising campaign these days to compel future disciples to follow him on his legacy, to buy into the Principles. When you force employees to hold ipads and rate one another during every human interaction (only the negatives and not the positives) something seems strangely unnatural. The employees must follow Ray because they have no choice. Either follow or exit the hive after two years or less with significant handcuffs related to confidentiality and noncompetition. Employees are people, not machines processing big data. They have feelings, emotions, disabilities, and sometimes it is just OK to be vulnerable and weak. Presumptively, employees seek out encouragement, optimism and uphold a personal desire to succeed in their careers. Principles or Newspeak seeks to prey upon the weak and injured and suck dry any semblance of empathy and “Compassion”, a Buddhist concept (Bodhicitta or “enlightened mind”). Yet Ray wants to sell his brand of Principles to every corporation and we should all be concerned.
(*“Newspeak” was a phrase used repeatedly in George Orwell’s infamous novel 1984 and fully described in the Appendix to the novel. “Newspeak was the official language of Oceania and had been devised to meet the ideological needs of Ingsoc or English Socialism…The purpose of Newspeak was not only to provide a medium of expression for the world-view and mental habits proper to the devotees of Ingsoc, but to make all other modes of thought impossible. It was intended that when Newspeak had been adopted once and for all and Oldspeak forgotten, a heretical thought—that is, a thought diverging from the principles of Ingsoc—should be literally unthinkable, at least so far as thought is dependent on words…For the purposes of everyday life it was no doubt necessary, or sometimes necessary, to reflect before speaking, but a Party member called upon to make a political or ethical judgment should be able to spray forth the correct opinions as automatically as a machine gun spraying forth bullets. His training fitted him to do this, the language gave him an almost foolproof instrument, and the texture of the words, with their harsh sound and a certain willful ugliness which was in accord with the spirit of Ingsoc, assisted the process still further.” Id.)
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On May 24, 2016, I wrote an article entitled Four Ways to Get Out of Arbitration Agreements At Work. This article arose as a result of client concerns and my own professional frustration with how employees are duped into arbitration agreements. Fortunately, I am not the only professional angered by employer overreaching and underhanded contract formation with employees. The Employee Rights Advocacy Institute for Law & Policy just issued an article titled “Taking ‘Forced’ Out of Arbitration: How Forced Arbitration Harms America’s Workers”. The article closely parallels the points in my article, but does not discuss the issue of invalid jury waivers, which I believe is the key to defeating arbitration agreements.
The Institute’s article focuses primarily on employer’s undermining an employee’s constitutional right to access the court system. The article provides various methods of avoiding forced arbitration agreements and then argues for a Congressional Amendment to the Federal Arbitration Act. The article also portrays arbitration as more costly in comparison to federal court litigation but with substantially less damages, citing statistics from the Economic Policy Institute.
Overall, the article is a well-intended start in getting the discussion moving towards a more fairer resolution of this issue, quite possibly an FAA amendment. However, one article is hardly going to stop the current train wreck employers are all on. I would portray the current forced arbitration issue as an epidemic crisis that now has real lasting personal and economic effects that adversely affects us all. Forced arbitration is “forced nondisclosure” regarding very real legal concerns and controversies we all need to know about. Disclosure ensures transparency and without it we all suffer.
You need not look very far as you may also have an arbitration provision buried in your employment documents that you were unaware of.
You may not know it, but your employer duped you into signing an arbitration agreement. Buried in all that paperwork when you started, was a hidden clause that said if you have a legal dispute with the company, you are required to file a private arbitration case and you waived your right to a jury trial in a public court. That does not feel good right? Use of arbitration agreements has skyrocketed out of control. (October, 2015, the NY Times). There are ways to escape this corporate nonsense.
1. You Must Have the Intention to Agree to Arbitration
Arbitration is not required or mandated when there is no agreement to arbitrate. An employee cannot be compelled to arbitrate unless he or she agreed to do so. The intent of both parties lies at the heart of the issue of whether an arbitration agreement should or should not be enforceable.
2. An Employer Cannot Force You Into An Agreement to Arbitrate By Fraud or Duress
If an employee can show some substantial relationship between the fraud committed or the misrepresentation made by the employer and the arbitration agreement, a court will void the agreement. Basically, if you lack the intent to agree to arbitration by way of demonstrating you were tricked into the agreement in some way with false representation, then you will not be forced into arbitration.
3. Unconscionable Arbitration Agreements Will Not Be Enforced
If you can show that the making of the arbitration agreement was unconscionable in some way, meaning you never meant to enter into it in the first place, then you can escape enforcement of the agreement. Similar to fraud or misrepresentation, the employer cannot trick you into entering the agreement through the use of fine print or convoluted language or unequal bargaining positions. You can also escape an arbitration agreement by demonstrating that the terms of the agreement itself are inherently unequal in favor of the employer. Courts require both of the aforementioned methods to show the agreement is unconscionable, thus unenforceable.
4. Failure to Provide a Valid Jury Waiver
You can further avoid arbitration agreements by demonstrating the agreement does not provide a valid jury waiver. You have a basic constitutional right to a jury trial in civil cases and any arbitration agreement must set out in bold print, easy enough to spot, some language saying you are waiving your right to a jury trial. Connecticut and many other states follow this rule.
5. Corporations Use Arbitration to Conceal Their Bad Behavior
Corporations tell you they rely upon arbitration agreements because this form of litigation is cheaper and quicker. That’s a whole lot of bull. Corporations use arbitration agreements to conceal bad behavior of their own management employees from the public and other employees who also want to sue their employers for the same bad behavior. There is no public data base to look up who brought an arbitration proceeding against their employer. It’s like it never happened.
For more information, please contact Mark Carey at 203-255-4150 or firstname.lastname@example.org.