Democratic lawmakers announced their re-introduction of the “Forced Arbitration Injustice Repeal Act” (FAIR Act) on April 28, a bill proposing a ban on forced arbitration clauses in employment, consumer, and civil rights cases.
The FAIR Act would grant employees and consumers the right to choose between resolving legal disputes by arbitration or in the Court system.
Rep. Hank Johnson (D-Ga.), one of the Congressmen who initially re-introduced the bill, issued a press release on the FAIR Act.
“Forced arbitration is an underhanded maneuver that corporations use to trick consumers, worker, and small businesses out of their right to go to court,” Rep. Johnson said.
U.S. Sen. Richard Blumenthal (D-Conn.) said in the press release that forced arbitration is unfair and un-American.
“One of the fundamental principles of our American democracy is that everyone gets their day in court,” Sen. Blumenthal said.
According to the U.S. Department of Labor, over 60 million workers are now subject to mandatory arbitration.
What once affected 2% of workers in the early 1990s now affects 56% of all non-union private sector employees and 65% of employees making less that $13 per hour.
Additionally, according to a 2018 study by North Carolina Law Review, workers subject to mandatory arbitration bring 98% fewer claims under the Fair Labor Standards Act than those not subject to mandatory arbitration.
Johnson and Blumenthal claim that forced arbitration restricts Americans’ rights to a public trial without unnecessary delay.
According Johnson and Blumenthal, employers prefer arbitration because it is a more private, efficient, and less formal process than litigation.
However, they argue that it is unjust when corporations can write the rules to the arbitration, keep the process secret, and limit discovery, making it difficult for workers to bring evidence against them.
Bipartisan Support for Ending Forced Arbitration
A 2019 survey by Hart Research Associates found that there is strong support for ending forced arbitration among both Democrat and Republican voters.
According to the survey, 84 percent of Republicans and 83 percent of Democrats strongly believe consumers should have a choice between court and arbitration.
These percentages remained consistent when respondents were asked if they would support a bill banning arbitration in cases of a dispute between a corporation and a consumer or employee: 87 percent of Republicans and 83 percent of Democrats would support such a bill.
Despite enjoying bipartisan support among voters, the survey found that public knowledge of arbitration remains limited.
Less than half of voters are aware of signing a contract requiring conflict resolution by arbitration, and just 22 percent believe that such requirements are “very common.”
Support among voters does not necessarily translate into votes in Congress, however.
The bill previously passed the House of Representatives during the 115th, 116th and 117th Congresses.
In September 2019 the FAIR Act passed the House by a vote of 225 to 186, with Rep. Matt Gaetz (R-Fla.) being the only Republican to vote in favor of the bill.
That time around, the bill failed to be brought to a vote by the then Republican-controlled Senate.
Ending forced arbitration in racial discrimination cases
In March of 2022, President Biden signed the Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act of 2021, a similar law meant to protect victims of sexual assault and harassment from contracts forcing them into arbitration.
The passage of this bill followed the popular #MeToo movement and a heightened focus on workplace sexual misconduct.
The most recent attempt at ending forced arbitration is the bill proposed by Sen. Cory Booker (D-N.J.) and Rep. Collin Allred (D-Texas) on May 2, the “Ending Forced Arbitration of Race Discrimination Act.”
This bill would create a new definition for a “race discrimination dispute”: a dispute relating to conduct that is alleged to constitute discrimination on the basis of race, color, or national origin.
Any worker claiming to have been the victim of racial discrimination in the workplace would be able to waive any previous arbitration agreement with their employer.
On Monday, May 8 a group of seven Democratic Senators and Sen. Bernie Sanders (I-Vt.) sent a letter to Tesla, urging the company to end its practice of forced arbitration in employee and customer contracts.
The letter references several recent reports and lawsuits against Tesla for a culture of “severe and pervasive harassment.”
The Senators argue in the letter that Tesla uses arbitration agreements to provide itself immunity from racial and gender discrimination.
Sen. Booker and Rep. Allred’s proposed legislation could block Tesla from forcing employees and consumers levying claims of racial discrimination into arbitration.
The passage of the similar 2021 bill against forced arbitration in sexual assault and harassment cases suggests that Booker and Allred’s bill could see bipartisan support and eventual passage into law.