Once you start looking, you’ll see ’em everywhere.
As with the women peddling brightly printed leggings and tunics who say they were victims of a pyramid scheme but who likely won’t get their day in court because of the agreement they signed. And the Goldman Sachs managing director who couldn’t join one of the biggest sex discrimination class-action lawsuits on Wall Street because of an agreement she signed when she was promoted.
And just this past Tuesday, there was the ride-sharing giant that, after pressure from critics and one prominent former employee, is ending its practice of not allowing employees — and riders — to bring sexual harassment claims against the company to court.
We’re talking about arbitration agreements, which require employees to handle disputes through the private system of arbitration, instead of the courts, and which can also keep employees from joining class-action, or other collective, cases.
It’s the type of contract that employers make you sign when you first get hired — you know, that stack of papers you barely read when you’re getting onboarded. More than half of the Fortune 100 have used arbitration agreements, including companies such as Comcast, Amazon, and Wells Fargo, according to a 2018 report by the National Employment Lawyers Association (NELA) Institute.
Many folks in business and legal circles say arbitration is faster and cheaper than court. Others say that arbitration agreements remove a powerful tool that employees have against their employer: class-action lawsuits. Then-Philadelphia Inquirer and Daily News workplace reporter Jane von Bergen wrote a good rundown of the issue in 2016.
But here’s the most pressing news: The Supreme Court of the United States is about to issue a decision on these agreements, ruling whether or not employers can force employees to sign away their rights to a class-action.
It’s unclear where SCOTUS will land on the issue, though some say oral arguments seemed to some observers to lean toward employers. Either way, here’s a preview of what it would mean.
The decision will have a big impact if employers continue to use these types of agreements, said Chris Stief, managing partner of the Philadelphia office of employer-side law firm Fisher & Phillips.
If the ruling is favorable to employees, we can expect employers who use arbitration agreements that bar class-actions to rewrite those agreements, Stief said. He added that some employers offer an opt-out option to these agreements, and if they do, they likely won’t need to rewrite them.
A ruling that’s favorable to employees could also dramatically increase the number of successful wage theft cases, because class-actions are the most effective tool to return stolen wages, said Cliff Palefsky, a San Francisco-based lawyer and NELA member who has been fighting against mandatory arbitration for more than a decade.
Another major question, Palefsky said, is: If companies couldn’t ban employees from class actions, would they even keep using arbitration agreements? He doesn’t think they would, because companies have to pay for arbitration and, he says, it can get costly.
And if the ruling is favorable toward employers, Stief says, we might see even more employers begin to use arbitration agreements. Palefsky says it would lead to an “explosion of individual cases” that could end up being very expensive.
And if you’re an employee reading this and wondering what you can do if your new company asks you to sign an arbitration agreement?
You might be out of luck: It’s often a condition of employment, says Pete Winebrake, a labor lawyer with Winebrake & Santillo in Montgomery County. Stief, on the other hand, says that he’s seen some companies that “have a tolerance for non-uniformity” and that are willing to negotiate, but it really depends on company culture and policy. Stief also points out that some companies also include that opt-out provision when it comes to barring class-actions.
But more important, find out whether there is such an agreement when you’re getting hired. Winebrake says he’s spoken to hundreds of employees who have signed these agreements and have not known that they did so. Sometimes they didn’t even physically sign; they could have clicked a button saying they read and acknowledged the terms — which is a thing that anyone using the internet knows about.