The US corporate parallel justice system is a recipe for injustice
American society is famous for its religiosity. However, a phenomenon that has spread throughout the economy in recent decades has resulted in millions of people signing up to the right to a court date.
US companies have been inserting mandatory arbitration small print terms of contracts for everything from jobs to credit cards and nursing homes. These clearly state that any dispute with the company will be resolved by arbitration instead of a court: a simpler and more informal system in which the arbitrator will hear both parties and make a decision. determined. Usually, the company chooses the arbitration provider, the proceedings are behind closed doors and there is little opportunity for appeal.
This parallel justice system is now vast. In the field of consumer finance, 2015 research of the Consumer Financial Protection Bureau found that 16% of credit card issuers use arbitration clauses (including 53% of credit card balances) along with 84% of short-term lenders (including 99 % storefront).
In the labor market, mandatory arbitration provisions now cover about 55% of non-union private sector workers, double the rate in the early 2000s, according to one Research 2018 by Alexander Colvin, a scholar at Cornell University. Colvin says this means about 60 million workers can no longer go to court to protest violations of rights like the minimum wage or protections against discrimination or harassment. These provisions are more common in low-wage workplaces, and they also often come with class-action waivers.
Arbitration can benefit individuals. It’s usually quicker and cheaper than going to court. The American Arbitration Association, one of the largest arbitration providers, charge for example, an employee must pay $300 filing fees for a single arbitration dispute, while an employer must pay $1,900 and $750 case management fees. The major vendors have rules they say make sure the process is fair. Proponents argue that the alternative would be lengthy legal proceedings that would benefit lawyers far more than the average American.
But there’s cause for concern anyway. Not every arbitration process is fair to the individual. In a case involving a US company elsewhere in North America, David Heller, an Uber driver in Toronto, wants to take the company to court over workers’ rights. He said His contract contained a clause that meant he had to resolve the dispute through arbitration in the Netherlands, requiring an upfront administrative and filing fee of $14,500. The courts of Canada ultimately found this provision “unconscionable”, based on the inequality of bargaining power between the parties and the costs of arbitration.
Some studies suggestions individuals are less likely to win in arbitration than in court and the prizes they receive are smaller. Keeping disputes out of court can also keep system problems need to change within a particular company.
Resistance to mandatory arbitration in the US is growing. ONE bill introduced Congress would ban provisions in employment, consumer and civil rights cases, while some companies such as Google dropped them after a staff protest.
Plaintiffs’ attorneys also found a way to turn the tables. They are filing hundreds or even thousands of individual arbitration claims with one employer at a time, which costs companies huge upfront fees. Gig DoorDash Company ended up in court tried to break out of its own arbitration agreement last year after more than 5,000 traffickers filed a lawsuit. It received a brief objection from a judge.
And after Amazon faced more than 75,000 individual arbitration requests on behalf of Echo users, the company changed its terms of service to allow customers to file lawsuits, the Wall Street Journal reports. report This year.
There could be a system that avoids unnecessary lawsuits that go unnoticed. For example, in the UK, people who want to take their employer to settlement court are offered free mediation by a government agency called the Advisory, Mediation and Arbitration Service. . If the parties cannot agree, they can still take it to court. It works fine: only about one quarter of the disputes handled by Acas leading to the court order. Meanwhile, 82% of claimants and 80% of participants are from the employer side The report satisfied with the service.
A country where “I will see you in court” is the first answer to any dispute is not fair. But one of those cases where someone said “I can’t see you in court because I had to give up my right to do so” is definitely worse.