What Is Forced Arbitration?

Forced arbitration recently made national headlines following President Biden’s signing of the Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act in early March. It was a huge step toward justice and fairness for those who suffer(ed) sexual assault or harassment in the workplace.

Alongside the new Act, another story has brought to the forefront the years-long fight to end forced arbitration for all types of workplace disputes. In February, Brian Flores, former head coach of the Miami Dolphins, filed a racial discrimination class action lawsuit against the NFL and three of its teams. Flores alleged racial discrimination related to his firing from the Dolphins and the NFL’s hiring practices.

Just one month after he made the claim, the Miami Dolphins requested to resolve the dispute in arbitration. Now, Flores is pushing for his day in court and has asked the NFL to reject the request. He cited that arbitration lacks transparency and limits justice for victims of workplace discrimination.

While the signing of the Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act covers just one area of employment disputes, there’s a growing movement to end all forced arbitration in the U.S. 

The U.S. House also just passed the Forced Arbitration Injustice Repeal (FAIR) Act of 2022, which would prohibit two common practices – the use of pre-dispute arbitration clauses that force arbitration of future employment, consumer, antitrust, or civil rights disputes; and waivers of the right to bring joint, class, or collective actions. The White House supports the act, but it’s unknown how the Senate will act.

Advocates across the country have long since alleged forced arbitration has allowed employers and businesses to silence victims and hide wrongdoings. Arbitration clauses are often in the fine print of employment and other types of contracts, and resolutions reached this way have been criticized as unjust and unfavorable for the employee or consumer of goods and services.

As the coalition grows and the disadvantages of arbitration are exposed on a national level, more changes may be ahead. But the fact remains that employment law is complicated, and those who suffer discrimination, harassment, unfair wages, wrongful termination, and other mistreatment or harm at work deserve to be heard and properly compensated. Often, resolving these cases is limited to arbitration due to a signed contract that stipulates how disputes will be handled. However, victims should still seek legal counsel to discuss their options.

What is Arbitration?

Arbitration is a common alternative to dispute resolution that avoids going to court. It’s a private resolution where both parties present evidence, arguments, and witnesses, but behind closed doors.

The use of an arbitrator/arbiter or arbitral tribunal that’s considered a neutral third party decides the outcome instead of a judge or jury. State law and contractual clauses may affect the arbiter selection process and could involve the parties working together to select one arbiter. Alternatively, sometimes each side chooses an arbitrator who together decides the third member of the tribunal.

The arbitration results may be binding or non-binding, depending on the type. Binding means the decision is final and cannot be disputed. It also means that a claim cannot be pursued in court. Non-binding arbitration means that the decision may be rejected by either party, who can then decide to pursue a trial.

Types of Arbitration

There are specific ways and reasons someone enters arbitration, including judicial arbitration, contractual arbitration, and by stipulation or under agreement once a dispute arises. Judicial arbitration occurs when a judge orders the parties to engage in this type of dispute resolution to avoid going to court. The goal is to reach a quicker and more cost-effective resolution than trials. Judicial arbitration is non-binding, so if a party is unhappy with the arbitrator’s decision, they retain their constitutional rights to pursue a trial. It’s common in family law cases, especially those involving custody battles.

Contractual arbitration is different, and it’s the basis of the Miami Dolphins’ request for arbitration in the Brian Flores case. Employment and service contracts often include arbitration clauses, and once signed, it’s very difficult to take an employer to court because it’s considered legally binding. Contracts usually outline the process, format, and rules of arbitration too. It’s unsurprising then that forced arbitration clauses typically benefit the employer or business. After all, they’ve made the rules.

Finally, arbitration by stipulation or agreement is both parties agree to handle the claim through arbitration after a dispute occurs. There’s no contractual clause, previous agreement or court order in this type of arbitration. Instead, the parties have the option to agree to arbitration to handle the matter.

Pros and Cons of Arbitration

Historically, arbitration was seen as a benefit for all involved. It’s a way to settle disputes that avoid court delays, lowers costs (compared to litigation), and reduce the emotional strain of the victim by keeping it away from public scrutiny. The flexibility it offers regarding the process and procedure, as well as conducting the resolution based on the availability of all involved, was enticing for both sides.

Another benefit of arbitration is that it introduces a neutral third party; an arbitrator or members of a tribunal could have greater expertise and knowledge related to the issue, industry and other factors that a judge or jury wouldn’t.

However, most of these benefits of arbitration are now viewed as disadvantages to the person wronged or harmed. The flexible process and procedure allow companies to hide key information and evidence that would likely otherwise be revealed – publicly – at trial. If it’s binding, the losing party has no legal grounds to request to take the defendant to court.

There’s no judge or jury to focus on the legalities of a case in arbitration, and there’s no court-supervised discovery process. Arbitrators don’t need to follow the rules of evidence, and conflicts of interest among these decision makers have occurred in many resolutions. And when it comes to the cost of arbitration, the hourly wages for arbitrators are high, and it’s common for both parties to seek legal counsel, so the cost is significant for those involved. This is especially true for the person wronged because they don’t have the financial strength that a business does.

Employment Arbitration & Legal Options

Forced arbitration affects consumers, workers, homeowners, and one of our most vulnerable populations – seniors. There are clauses found in the fine print of many types of contracts, including employment, banks, nursing homes, and cell phones. Unfortunately, the average employee is completely unaware of hidden clauses that force arbitration, and yet it takes away their right to a trial if something happens.

While the recent act that ends forced arbitration for sexual assault and harassment in the workplace is a positive step toward fairness, justice and accountability, it does not protect other issues, such as racial discrimination and pay inequality at work. Many see contractual clauses that force employees into arbitration as a way to hide flagrant wrongdoings from the public and others who may have had a similar experience with an employer.

Whether the request for arbitration by the Miami Dolphins holds up in the Flores dispute is unknown at this time, but where and how the case proceeds will no doubt influence the resolution – and further spur the efforts of advocates who hope to end all forced arbitration in the U.S.

If you’re being forced into arbitration, an experienced employment attorney can help ensure the best outcome. The Cochran Firm Texas represents Texans mistreated or unfairly treated in the workplace, and we offer free consultations to discuss your case. Contact us at 1-800-THE-FIRM (1-800-843-3476), chat with us online, or fill out our contact form to get started.