Beware of The Forced Arbitration Clause

We live in a day and age where the right to fair compensation is under constant attack. More often than not, if you have been the victim of employment discrimination, negligence, fraud, or breach of contract, your only hope of recovering damages is by selecting an experienced employment law attorney. From the obstacles of filing a lawsuit to caps on recoverable damages, the odds of success are often stacked against individuals in favor of large corporations.

One tool increasingly used by large corporations to tilt the scales is the forced arbitration clause. These clauses can eliminate your constitutional right to have your case decided by an impartial jury. Unfortunately, arbitration clauses are easy to miss—they are frequently:

• Masked as required online trainings

• Hidden behind hyperlinks

• Buried in pages of fine print within contracts you are asked to sign

You’ve Probably Already Agreed to Arbitration

Have you ever purchased a phone, applied for a credit card, or had a job? If the answer is yes, you have more than likely signed a contract that included an arbitration clause. Whether you read it or not, you likely agreed to resolve disputes with that business outside of court.

This has become a rapidly growing issue across the United States.

How Forced Arbitration Became So Common

Over the past decade, thousands of businesses have used arbitration clauses to create an alternate, private system of “justice.” Through arbitration, companies can resolve disputes without ever stepping into a courtroom.

Although this trend has largely gone unnoticed, its impact has been enormous. Tens of millions of Americans have been deprived of their fundamental right to have their case heard in court due to forced arbitration agreements.

Even if you have a claim involving:

• Negligence

• Medical malpractice

• Sexual harassment

• Employment discrimination

• Whistleblower retaliation

• Fraud or theft

• Elder abuse

• Wrongful death

…you may still be required to arbitrate if you signed a contract containing an arbitration clause.

Why Corporations Prefer Arbitration

Large corporations often argue that arbitration benefits consumers and employees because disputes can be resolved more quickly and privately. But if arbitration were truly better for individuals, why isn’t it optional?

Instead, arbitration clauses are often concealed and made mandatory—forcing people to accept them just to obtain a phone, credit card, or job. The reason is simple: arbitration overwhelmingly favors businesses, not individuals.

How Arbitration Differs From the Court System

Arbitration is fundamentally different from the judicial process guaranteed by federal and state constitutions. In arbitration:

• There is no judge

• There is no jury

• There is no public courtroom

• Discovery and evidence-gathering are often limited

In some cases, arbitration clauses may also require you to:

• Travel to another state

• Apply the law of a different state

• Pay the other side’s legal fees if you lose

Who Decides Your Case in Arbitration?

The arbitrator is typically a lawyer paid by the parties to decide the case. While arbitrators are supposed to be neutral, they often have an economic incentive to rule in favor of large corporations—who are far more likely to use their services again in the future.

Even more concerning, an arbitrator’s decision is usually final, with very limited rights to appeal.

Arbitration Clauses and the Supreme Court

As arbitration clauses have become more widespread, they have also become heavily litigated. In the past several years, arbitration-related cases have been argued before the U.S. Supreme Court multiple times.

Despite close decisions, the Supreme Court has generally upheld the use of arbitration clauses in consumer and employment contracts.

What to Do If You’re Facing an Arbitration Clause

If you believe you have been the victim of employment discrimination, negligence, fraud, breach of contract, or other wrongdoing, the first question to ask is:

“How will my claim be decided?”

If the answer involves arbitration, the next question is whether the arbitration clause is legally enforceable. In some cases, arbitration clauses may be void or unenforceable due to:

• Ambiguous language

• Improper formation of the contract

• Violations of state contract law

An experienced attorney from Murphy, Kinney, & Sumy, LLC can review your agreement and help determine your options.