On October 27, the Washington Post reported that U.S. employers closed nearly 14,000 private arbitration cases in 2020, a 17 percent increase from 2019. The Post wrote about findings from a report by the American Association for Justice.
“Critics say the system, in which cases are decided by private arbitrators, keeps employment disputes out of the public eye and fails to hold corporations accountable,” the Post wrote. Mandatory arbitration agreements are increasingly common, both as a condition of employment and for consumers signing up for products and services.
This week, the House Judiciary Committee is marking up the Forced Arbitration Injustice Repeal (FAIR) Act, which would ban mandatory arbitration. According to a 2018 report from the Economic Policy Institute, arbitration disproportionately affects low-wage workers and the retail industry; arbitration typically favors companies while shielding them from accountability for working conditions. According to the new report, employees were awarded money in just 1.6 percent of arbitrations in 2020. Decisions in arbitrations are final and cannot be appealed.
California has moved to prohibit mandatory arbitration for employees, but nationwide, just three states, including California, require arbitration companies to self-report certain data, like claim types and the prevailing party in each case.
Lauren Teukolsky is one of the leading experts in California on arbitration agreements. She is a frequent speaker at statewide conferences on the topic of arbitration, including for the California Employment Lawyers Association and the California Lawyers Association (formerly State Bar). If you have questions about whether an arbitration agreement is enforceable, contact us today for a consultation.
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Lauren Teukolsky is the founder and owner of Teukolsky Law, A Professional Corporation.