NLRB: Forced arbitration violates employee rights

According to a split National Labor Relations Board ruling, Citigroup must remove a class-action waiver from mandatory arbitration agreements.

According to a split National Labor Relations Board (NLRB) ruling, Citigroup must remove a class-action waiver from mandatory arbitration agreements it requires employees to sign. The NLRB declares that the waiver is a violation of employee rights to bring class claims. Citigroup has been compelled to remove this waiver from its employment contract. This removal may signal a widespread change in how forced arbitration clauses are viewed as potentially illegal tactics to deny employees and consumers their basic rights and take on unfair practices in an impartial court. 

Upon being hired, employees are often given an arbitration agreement as a condition of their hiring, in which they waive their right to sue their employer in court over job-related concerns like harassment, wrongful termination, breach of contract and more. Many companies may refer to the condition as "binding mandatory arbitration," "arbitration," "mandatory arbitration" or even call it a "dispute resolution mechanism." Arbitration is positioned as a way to have issues addressed and to avoid costly legal proceedings. Even so, arbitrations can prove costly to employees. Often they must occur in a specific location, regardless of where employees work or the location where the infraction took place. Individuals often have to pay a large fee to initiate the arbitration process, and an appeal is not allowed.

Since arbitration is a private yet legally binding affair, it can prevent workers from gathering to address systemic issues within the infrastructure of a workplace. Private arbitrators are not required to take the law and legal precedent into account in making their decisions, and their decisions are not able to be used as precedent. 

While arbitration can be a useful legal and optional preceding in simple cases not warranting a suit, the issue is that most employees are not fully aware of their rights or that they have signed them away by agreeing to a clause. A 2009 study by The Employee Rights Advocacy Institute For Law & Policy and Public Citizen revealed that the majority of workers subject to forced arbitration clauses were unaware that they were giving up their right to take their employer to court and/or were not made aware of forced arbitration in their employment papers. The study also showed that even if workers were aware of a forced arbitration clause, nearly 75 percent thought they could still take their employer to court.

It remains to be seen if more litigation barring mandatory arbitration is to come, but it pays to know your employee rights. If you feel you have been the victim of discrimination, harassment, abuse, retaliation or wrongful termination, the lawyers at The Meyers Law Firm would be glad to advise you the best way to proceed legally.