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Google recently did away with policies requiring employees to settle company disputes in private arbitration – expanding on a November decision to eliminate mandatory arbitration for sexual harassment disputes specifically. The New York Times reported that in a staff email, Google announced that it would get rid of mandatory arbitration for all company disputes starting March 21. This locks step with similar commitments from major tech companies including Facebook, Airbnb, eBay and Square, according to Recode.
And now, Democratic members of Congress are following suit with litigation that might end mandatory arbitration policies for companies nationwide.
Potential Legal Impacts
On Thursday, Feb. 28, Democrats introduced bills in the House and the Senate that would ban U.S. companies from enforcing mandatory arbitration policies in employment, civil rights, consumer and antitrust disputes, according to Yahoo. The legislation is called the FAIR Act, or the Forced Arbitration Injustice Repeal Act of 2019. It's not the first proposed bill of its kind – many have tried, and many have failed – but it's the latest.
Should the FAIR Act push through Congress, however, it would impact big business in a big way, as large firms are more likely to force their employees to settle company disputes in private arbitration.
FAIR Act Forces
Sen. Richard Blumenthal (D-Conn.) is co-sponsoring the legislation, and gave a press conference Thursday to announce it, as reported by Yahoo.
"No longer should people be forced to suffer in silence, to endure the unfairness of this kind of rigged system, stripped of their rights and forced to go before a nonusual arbiter," Blumenthal said at the press conference.
Lobbying organization American Association for Justice registered to advocate for the FAIR Act bills, and released a statement responding to them.
"Forced arbitration has become insidious in the United States as corporations use the secretive system to silence sexual harassment survivors, take advantage of workers and consumers and undermine public health and safety," the association said in its statement.
The Google Effect
Though several Silicon Valley tech hubs have committed to eliminating private arbitration for sexual harassment complaints, the movement gained real traction after Google employees sparked efforts in their company. Employee pushback against Google's mandatory arbitration policies blew up in November 2018, when 20,000 workers staged a walkout. These employees acted in response to a New York Times article revealing that a senior executive had received a $90 million exit package even following credible accusations of sexual harassment.
However, organizers of the walkout demanded that Google eliminate its mandatory arbitration policies for all types of employee disputes. Now, Google is obliging, attributing its decision to a comparison of its company policies to those of other companies, according to the New York Times. Employees may still arbitrate privately, if that's their preference. Google's new policies do not apply to former employee dispute cases.
History of Force Arbitration
Mandatory private arbitration isn't a new issue. Forced arbitration clauses in employment contracts gained popularity through the 1960s, when state and federal laws were expanding laws to protect U.S. workers, according to Yahoo. Critics say these clauses deny workers the ability to sue their employers in court, for issues even including sexual harassment.
Clauses mandating private arbitration appear in cell phone, credit card, utility, checking account and debit card contracts, as well, and for auto loans, payday loans and private student loans. Legislation proposed by the FAIR Act bills, however, would only extend to U.S. employers – but it's a start.
Gretchen Carlson, who formerly anchored for Fox News, sued and settled a $20 million sexual harassment suit against the news corporation's founder and CEO and worked with Democratic representatives on the FAIR Act.
“Forced arbitration clauses in employment agreements are not designed to achieve fair, expeditious or cost-effective resolutions for sexual harassment cases,” Carlson told Yahoo. “I believe every woman and man should be entitled to have their claims adjudicated in a courtroom rather than behind closed doors where victims can never discuss what happened.”