AAUW – PUBLIC POLICY CONVERATIONS – MAY 2024

It’s all in the small print.  Sign on the dotted line, even if you don’t know what you’re signing.  Often job applicants must sign a pre-hiring agreement to accept binding arbitration for any work-related issues that might occur.  When families make hard decisions about placing a loved one in a nursing home, admitting forms include a clause mandating arbitration as the sole means of settling any future dispute.  Under our Constitution, we have the right to jury trials, but the explosion of forced arbitration, often with non-disclosure clauses to enforce secrecy, slam the court door shut on millions with valid, serious grievances.

Testifying at an April  9, 2024 Senate Judiciary Committee hearing on Forced Arbitration, the National Association of Consumer Advocates said:  “Forced arbitration clauses, hidden in fine-print corporate contracts, block consumers, workers and small businesses from seeking justice in open court and gives corporations the power to force legitimate complaints into secretive and biased arbitration proceedings.  Corporations write the arbitration rules, including choosing the arbitration firm and location.  Arbitrators’ decisions are rarely appealable, even when arbitrators make clear and egregious errors.”  

Particularly heinous forced arbitration clauses prevent individuals from joining their claims together to seek accountability for wrongful corporate actions that cause widespread harm.  In the justice system class and collective actions are a critical tool for American consumers, workers and small businesses to seek remedies when ripped off or exploited by sophisticated bad actors.  How did we get here?  The 1925 Federal Arbitration Act (FAA) was passed to ensure that certain corporations with equal bargaining power could use arbitration to resolve complex legal matters.  This law was not originally envisioned to allow corporations to force arbitration and remove consumers’ and workers’ ability to choose how to get their complaints heard.  

The FORCED ARBITRATION INJUSTICE REPEAL ACT [F.A.I.R. Act],–S.1376/H.R.2953, prohibits pre-dispute arbitration agreements with forced arbitration of employment, consumer, anti-trust or civil rights disputes.  It also prohibits agreements and practices that interfere with the right of individuals, workers and small businesses to participate in a joint class or collective action.  

Former Fox News anchor Gretchen Carlson was among those testifying in support of the F.A.I.R. Act.

Thanks to her tireless advocacy, two years ago Congress prohibited use of forced arbitrations and non-disclosure clauses that kept secret cases of sexual assault or harassment at the workplace.  Carlson fought Fox News Corporation and won after the sexual harassment she endured, but she was silenced by a non-disclosure agreement.  “Watching the President sign the Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act into law was one of the proudest moments of my life,” Carlson testified.  She noted how forced arbitration has enabled discrimination against older workers and race discrimination in employment, naming Tesla as a serious offender.  Countless families whose loved ones died of horrific abuse and neglect in nursing homes were deprived of the dignity of being able to file a case in court, Carlson stressed.  The time is long past due to provide aggrieved Americans with a true choice to either file a lawsuit and not be silenced by non-disclosure clauses, or voluntarily choose binding arbitration if that is their preference.  

Lilly Gioia
Public Policy Chair