On Monday, hundreds of workers walked out of Riot Games over the company’s handling of two sex discrimination lawsuits. The company had these discrimination cases moved to a forced arbitration process, citing a clause in their employees’ contracts.
Forced arbitration is a practice that has become increasingly common for employers. In 2018, the Supreme Court ruled that employers have the right to require employees to settle collective disputes in individual arbitration. Here’s why this practice negatively impacts employees.
What is forced arbitration?
In forced arbitration, employees forego their ability to press charges against the company and instead settle all their disputes through an internal process. Employees usually agree to a forced arbitration clause in their contracts. This was the case for the Riot Games employees.
Employee concerns over forced arbitration
The problem that this creates is that the employer decides who the arbitrator is, where to hold the hearings and whether the decision is binding. Many times, an employee may not even know that this clause is in their contract or may not understand the impact of the clause. Arbitration cases, unlike court proceedings, are private and not shared with the public. They also do not need to take legal precedent into consideration.
Furthermore, forced arbitration can be a method to prevent large class-action lawsuits, and force workers to settle their claims in individual cases. This can additionally reduce any leverage employees may have to stop a company from engaging in unethical employment practices.
Fighting forced arbitration
Unfortunately, as the Riot Games incident demonstrates, a company may be able to enforce a forced arbitration clause. The best defense may be to not sign any forced arbitration clauses, if possible.
Not all contracts are legally binding, however. If a judge finds that a contract is invalid, then forcing arbitration may not be allowed, and the case can go to court.
In the Riot Games case, the plaintiffs and their coworkers banded together to walk out over the issue. This prompted the company to issue a statement that they would grant future hires the option to opt-out of the arbitration clause of their employment contract.
If you’re looking for a new job, this case serves as a reminder to check for any forced arbitration clauses in the employment contract. You may want to negotiate with your future employer to remove such clauses before you sign. Remember that even in a forced arbitration process, an employment law attorney may still be able to help you appeal the validity of the contract and get you a favorable outcome.
