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Privatizing Employment Law: The Expansion of Mandatory Arbitration in the Workplace

Published online by Cambridge University Press:  07 July 2020

Sarah Staszak Open the ORCID record for Sarah Staszak [Opens in a new window]
Sarah Staszak*
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Princeton University
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Email: sstaszak@princeton.edu
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Abstract

This article examines the institutional, political, and legal development of employment arbitration as it shifted from a Progressive Era form of justice enhancement to one co-opted by business-friendly conservatives arguably more concerned with protecting employers from litigation. While arbitration has a long history in the United States, the expanding use of mandatory, employer-promulgated arbitration clauses has more than doubled since the 2000s. In examining the nature of the shift, this article argues that it occurred through a gradual process of conversion in three institutional realms (1) legislative conversion, (2) private-sector conversion of public regulation, and (3) judicial conversion. Facilitated by a growing divide among Democrats on the value of arbitration, conservatives began to promote it in the 1970s and 1980s as backlash to the expansion of statutory employment rights. I argue that they did so by converting the institutional infrastructures of labor and commercial arbitration, a process continued by the private sector and Supreme Court. As such, this article argues that conversion is the product of multiple actors targeting multiple institutions, over decades, and with consequences for both the literature on institutional change and conceptions of equality under the law.

Type
Research Article
Information
Studies in American Political Development , Volume 34 , Issue 2 , October 2020 , pp. 239 - 268
Copyright
Copyright © The Author(s), 2020. Published by Cambridge University Press

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Footnotes

Acknowledgments: The author thanks William Gould and the participants of the 2019 conference on Law and Work sponsored by the Program in Law and Public Affairs at Princeton University,Philip Rocco and the panelists of “Dynamics of Policy Change” at the 2019 meeting of the Western Political Science Association, and Margaret Weir and the participants of the 2019 Toronto Political Development Workshop for their extremely helpful feedback. Thanks also go to SAPD's anonymous reviewers for their indispensable feedback and Christian Potter for his excellent research assistance.

References

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48. The law clearly sought to preserve some measure of judicial review of arbitration outcomes. Although its primary intention was to put arbitration on equal ground with other types of contracts, thereby requiring judicial deference, there are grounds in the FAA for courts to vacate an arbitrator's award. Specifically, Sections 10 and 11 of the law define when judges can vacate and/or modify an award. While review of an arbitration award on matters “affecting the merits” of a dispute is not allowed by the FAA, it does give courts the authority to weigh in where a contract or arbitrator's decision involves “corruption,” “fraud,” or “undue means.”

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68. Ibid., 123.

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70. Ibid., 811.

71. Congressional Record (March 31, 1886), 2959–81.

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73. Congressional Record (March 31, 1886), 2979.

74. Ibid., 2959.

75. Ibid., 2960. Terence Powderly, the head of the Knights of Labor, preferred a private binding arbitration between the union and the railroad, with three members each from the union and the railroad, and the six then agreeing to pick a seventh member, believing the proposed congressional legislation to be an insufficient solution to the specific conflict. “Investigation of Labor Troubles in Missouri, Arkansas, Kansas, Texas, and Illinois,” 17.

76. Ibid., 2962–63.

77. Ibid., April 23, 1886, p. 3761.

78. Ibid., 3761.

79. Congressional Record (April 18, 1888), 3099–3109.

80. Quoted in Fink, “American Labor Justice”, 49–55, 53.

81. Ibid., 50.

82. U.S. Strike Commission, “Report on the Chicago Strike of June-July 1894,” 53rd Congress, 3rd Session, Senate, Ex. Doc., 7 (December 10,1894), xxviii.

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104. Employment rights statutes continued to proliferate in the years after the CRA. The Pregnancy Discrimination Act (1978) and the Family Medical Leave Act (1993) provide rights against sex discrimination when it comes to pregnancy and childbirth as well as set forth requirements governing leave for pregnancy and related conditions, respectively. The Black Lung Benefits Act of 1973 prohibits discrimination against miners who suffer from the disease; the Vietnam Era Readjustment Act of 1974 requires affirmative action for disabled Vietnam veterans by federal contractors; the Bankruptcy Act of 1978 prohibits employment discrimination on the basis of bankruptcy or bad debts; the Immigration Reform and Control Act of 1986 prohibits employers with more than three employees from discriminating against anyone (except unauthorized immigrants) on the basis of national origin or citizenship; and the Genetic Information Nondiscrimination Act of 2008 bars employers from using individuals’ genetic information when making hiring, firing, job placement, or promotion decisions.

105. See, e.g., Farhang, The Litigation State; Frymer, Black and Blue; Lieberman, Robert C., “Ideas, Institutions, and Political Order: Explaining Institutional Change, American Political Science Review 96, no. 4 (2002): 697–712CrossRefGoogle Scholar.

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112. Ibid., 9.

113. Ibid., 8.

114. Ibid., 13.

115. “State of the Judiciary and Access to Justice Act,” Hearings before the Subcommittee on Courts, Civil Liberties, and the Administration of Justice, House of Representatives, 95th Congress, 1st Sess., June 20, 1977, p. 12.

116. Ibid., 47.

117. Ibid., 251.

118. “Court-Annexed Arbitration Act of 1978,” Committee on the Judiciary, U.S. Senate, Report No. 95-1103 to Accompany S. 2253, 95th Congress, 2nd Sess., August 10, 1978.

119. “Access to Justice,” Hearings before the Judiciary Committee, U.S. Senate, 96th Congress, 1st Sess., February 13 and 27, 1979, p. 1.

120. Ibid., 38.

121. Staszak, No Day in Court, 64–66.

122. Ford Foundation Grants, Bay Area Lawyers for the Arts, 1980–81, https://dimes.rockarch.org/xtf/view?docId=ead/FA732A/FA732A.xml;chunk.id=d17d1a88d2c3147f266da83c3aaa54e8;brand=default;query=bay%20area%20lawyers%20for%20the%20arts&doc.view=contents.

123. “Access to Justice” (1979), 9.

124. P.L. 101-648 and 552, respectively.

125. P.L. 101-650.

126. “The Civil Justice Reform Act and Judicial Improvements Act of 1990,” Hearings before the Committee on the Judiciary, U.S. Senate, 101st Congress, 2nd Sess. (March 6, 1990), 3.

127. Gilmer v. Interstate/Johnson Corp., 500 U.S. 20 (1991).

128. See Farhang, The Litigation State, pp. 173–78. He discusses the Reagan Administration and EEOC treatment of Title VII.

129. See Wards Cove Packing Co. v. Antonio, 490 U.S. 642 (1989); Price Waterhouse v. Hopkins, 490 U.S. 228 (1989); Martin v. Wilks, 490 U.S. 755 (1989); Lorance v. AT&T Technologies, Inc., 490 U.S. 900 (1989); and Independent Federation of Flight Attendants v. Zipes, 491 U.S. 754 (1989).

130. Wards Cove Packing Co.

131. House Report 101-644, Part 2 on H.R. 4000, The Civil Rights Act of 1990, July 31, 1990, p. 72, citing Testimony of Professor Jeremy Rabkin, Hearings on H.R. 4000, pp. 409–10.

132. Ibid., 170.

133. Ibid., 195 (comments of Larry Daves, civil rights lawyer).

134. “Civil Rights Acts,” House Reports 102-40, Part 2, 102nd Congress, 1st Sess., May 7, 1991, p. 41.

135. Ibid., 71–78.

136. Ibid.

137. Seth Faison Jr., “Rash of Suits Seen after Rights Act,” New York Times, November 30, 1991, A1.

138. U.S. General Accounting Office, “Alternative Dispute Resolution: Employers’ Experiences with ADR in the Workplace” (August 1997), 9, https://www.gao.gov/assets/230/224517.pdf.

139. Ibid.; Peter T. Kilborn, “Age Bias Case Could Limit Right of Workers to Sue,” New York Times, March 25, 1991, A1; Barbara Presley Noble, “New Questions about Arbitration,” New York Times, June 14, 1992, 112; Steven A. Holmes, “Some Employees Lose Right to Sue for Bias at Work,” New York Times, March 18, 1994, A1.

140. See U.S. General Accounting Office, “Employment Discrimination: Most Private-Sector Employers Use Alternative Dispute Resolution,” GAO/HEHS-95-150 (July 5, 1995), https://www.gao.gov/assets/230/221397.pdf; Colvin, A. J. S., Adoption and Use of Dispute Resolution Procedures in the Nonunion Workplace (Ithaca, NY: Cornell University ILR School, 2004)CrossRefGoogle Scholar; David Lewin, “Employee Voice and Mutual Gains,” LERA 60th Annual Proceedings (2008): 61–83.

141. U.S. General Accounting Office, “Employment Discrimination.”

142. Colvin, “An Empirical Study of Employment Arbitration.”

143. Alexander Colvin and Kelly Pike, “The Impact of Case and Arbitrator Characteristics on Employment Arbitration Outcomes” (paper presented at the annual meeting of the National Academy of Arbitrators, Minneapolis, MN, June 2012), https://digitalcommons.ilr.cornell.edu/conference/22/.

144. On the “repeat player” effect, see Galanter, Marc, “Do the ‘Haves’ Come Out Ahead? Speculations on the Limits of Legal Change,” Law and Society Review 9 (1974): 95–160CrossRefGoogle Scholar.

145. There are several studies illustrating the empirical validity of the repeat player effect in arbitration. The most recent include Chandrasekher and Horton, “Arbitration Nation”; Horton, David and Chandrasekher, Andrea Cann, “After the Revolution: An Empirical Study of Consumer Arbitration,” Georgetown Law Journal 104 (2015): 57Google Scholar; Colvin, The Growing Use of Mandatory Arbitration; Colvin, Alexander and Gough, Marc D., “Individual Employment Rights Arbitration in the United States: Actors and Outcomes,” Industrial and Labor Relations Review 68, no. 5 (2015): 1019–42CrossRefGoogle Scholar.

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147. Notably, all of these executive orders were reversed by President Trump in the early months of his administration.

148. U.S. Commission on the Future of Worker-Management Relations, The Dunlop Commission of the Future of Worker-Management Relations, Final Report (December 1, 1994), 49, https://digitalcommons.ilr.cornell.edu/cgi/viewcontent.cgi?article=1004&context=key_workplace.

149. Ibid., 50.

150. Ibid., 54.

151. Ibid., 53–58.

152. Ibid., 52.

153. Office of General Counsel Guidance on Civil Justice Reform, Executive Order No. 12988, EEOC (February 7, 1996), https://www.eeoc.gov/eeoc/litigation/manual/3-1-a_eo_civil_justice_guidance.cfm. Bush's previous order was Executive Order 12778.

154. U.S. General Accounting Office, “Employment Discrimination”; Ibid., 4.

155. “Comments of the Women's Legal Defense Fund in Response to EEOC Request for Comments on the Use of Alternative Dispute Resolution,” Women's Legal Defense Fund, September 20, 1993, Records of Commissioner Paul Miller 1993–2005, A1 31, RG 403 Equal Employment Opportunity Commission, National Archives, College Park, MD.

156. “Statement of the Women's Legal Defense Fund on Alternative Dispute Resolution,” Women's Legal Defense Fund, February 9, 1995, Records of Commissioner Paul Miller 1993–2005, A1 31, RG 403 Equal Employment Opportunity Commission, National Archives, College Park, MD.

157. 534 U.S. 279 (2002).

158. McLeod v. General Mills, 140 F.Supp.3d (D. Minn. 2015), in P. David Lopez, U.S. Equal Employment Opportunity Commission, Office of General Counsel Fiscal Year 2016 Annual Report (Washington, DC: EEOC), https://www.eeoc.gov/eeoc/litigation/reports/upload/16annrpt.pdf.

159. U.S. Equal Employment Opportunity Commission, Policy Statement on Mandatory Binding Arbitration of Employment Discrimination Disputes as a Condition of Employment (2 EEOC Compliance Manual, BNA no. 915.002, July 10, 1997), pp. at 281–87, https://www.eeoc.gov/policy/docs/mandarb.html.

160. Ibid.

161. “Race-Race Initiative Policy-Civil Rights Enforcement [2],” in Elena Kagan's Domestic Policy Council Files, box 41, folder 12, Clinton Presidential Records: White House Staff and Office Files, 2009-1006-F.

162. “Can Federal Government Enter into Binding Arbitration,” in Civil Justice Reform EO [2], Office of the Counsel to the President, 2009-1006-F, Clinton Presidential Records: White House Staff and Office Files.

163. Claire Gonzales to Sylvia M. Mathews/WHO/EOP, Thomas L. Freedman/ODP/EOP, “EEOC Funding Talking Point,” January 29, 1998, and “Memorandum from Tom Freedman, Mary L. Smith to Elena Kagan, Re: EEOC Proposed Rule for Federal Agencies,” January 6, 1998 in Civil Justice Reform EO [2], Office of the Counsel to the President, 2009-1006-F, Clinton Presidential Records: White House Staff and Office Files.

164. “New Civil Rights Enforcement Initiative,” January 19, 1998, Civil Justice Reform EO [2], Office of the Counsel to the President, 2009-1006-F, Clinton Presidential Records: White House Staff and Office Files.

165. Memorandum: To Marvin Krislov from Alan M. Freeman, Re: Administration Proposals to Modify HR 2721: The Federal Employee Fairness Act of 1993, Domestic Policy Council Files, box 10, Clinton Presidential Records: White House Staff and Office Files, Clinton Presidential Records.

166. See, e.g., Equal Employment Advisory Council to John Morall, Office of Information and Regulatory Affairs, Office of Management and Budget, May 28, 2002, https://georgewbush-whitehouse.archives.gov/omb/inforeg/comments/comment2.pdf.

167. Ibid.

168. U.S. Equal Employment Opportunity Commission, Office of General Council Fiscal Year 2003 Annual Report, https://www.eeoc.gov/eeoc/litigation/reports/03annrpt/.

169. “Recission of Mandatory Binding Arbitration of Employment Discrimination Disputes as a Condition of Employment,” U.S. Equal Employment Opportunity Commission, December 16, 2019, https://www.eeoc.gov/wysk/recission-mandatory-binding-arbitration-employment-discrimination-disputes-condition

170. Comsti, “A Metamorphosis,” 19.

171. See Zack, Arnold M., “Agreements to Arbitrate and the Waiver of Rights under Employment Law,” in Employment Dispute Resolution and Worker Rights in the Changing Workplace, ed. Eaton, Adrienne E. and Keefe, Jeffrey H. (Ithaca, NY: Cornell University Press, 1999), 67–94Google Scholar.

172. For an extended discussion of the treatment of corporations by courts, see Adler, Jonathan H., ed., Business and the Roberts Court (New York: Oxford University Press, 2016)CrossRefGoogle Scholar; Winkler, Adam, We the Corporations: How American Business Won Their Civil Rights (New York: Liveright, 2018)Google Scholar.

173. It is important to note that the Court has also altered relevant aspects of contract law in order to accomplish these ends. These changes are more relevant to the law of commercial and consumer arbitration, but some—like doctrines governing “contracts of adhesion,” for example—apply to contracts of employment as well.

174. For a larger discussion of the conservative turn of law in the workplace, see Lee, The Workplace Constitution.

175. See, e.g., Resnik, “Diffusing Disputes.”

176. 9 U.S.C. § 2 (2012).

177. Gross, “Justice Scalia's Hat Trick,” 123.

178. See EEOC v. Waffle House, Inc., 534 U.S. 279 (2002), Thomas dissenting.

179. 460 U.S. 1 (1983).

180. 465 U.S. 1 (1984).

181. 473 U.S. 614 (1985).

182. Ibid., 628.

183. See, e.g., Bales, Richard A., Compulsory Arbitration: The Grand Experiment in Employment (Ithaca, NY: Cornell University Press 1997)CrossRefGoogle Scholar.

184. Ibid., 628.

185. 415 U.S. 36 (1974).

186. 450 U.S. 728 (1981).

187. Ibid., 950.

188. The Court also addressed this in another case in 1981 (McDonald v. City of West Branch, 466 U.S. 728), holding that a labor arbitrator's decision could not restrict an employee from litigating a wrongful discharge claim.

189. Green, Michael Z., “Retaliatory Employment Arbitration,” Berkeley Journal of Employment & Labor Law 35, no. 1–2 (1994): 206–207Google Scholar.

190. 556 U.S. 247 (2009).

191. Brief for the United States as Amicus Curiae Supporting Respondents, No. 07-581, 9.

192. Comsti, “A Metamorphosis,” 13.

193. 561 U.S. 63 (2010).

194. 569 U.S. 564 (2013).

195. Horton and Chandrasekher, “After the Revolution,” 67–68.

196. Brief of the Chamber of Commerce of the United States of America as Amicus Curiae Supporting Petitioner.

197. Horton and Chandrasekher, “After the Revolution,” 70–71.

198. 563 U.S. 533 (2011).

199. 565 U.S. 95 (2012).

200. 570 U.S. 228 (2013).

201. Concepcion, 9.

202. 15 U.S.C. § 1679c— Disclosures.

203. Italian Colors, 1.

204. Gross, “Justice Scalia's Hat Trick,” 132.

205. 586 U.S. (2019).

206. Henry Schein, Inc. v. Archer and White Sales, Inc., 586 U.S. (2019).

207. 586 U.S. (2019).

208. Ian Millhiser, “DoorDash's Anti-Worker Tactics Just Backfired Spectacularly,” Vox, February 12, 2020, https://www.vox.com/2020/2/12/21133486/doordash-workers-10-million-forced-arbitration-class-action-supreme-court-backfired.

209. Terrell Abernathy, et al., v. DoorDash Inc., United States District Court, Northern District of California, No. C 19-07545 WHA.

210. Ibid., 7.

211. Ibid., 8.

212. Democrats in Congress have proposed some version of an “Arbitration Fairness Act” in almost every session since 2001, to no avail.

213. For example, New York has enacted one bill and has two more currently in committee, all of which prohibit mandatory arbitration provisions in contracts relating to allegations of sexual harassment. South Carolina is currently considering the “Ending Forced Arbitration of Sexual Harassment Act of 2018,” that provides “no predispute arbitration agreement is valid or enforceable if it requires arbitration of a sex discrimination dispute.”

214. For example, see Rachel Deutsch, Rey Fuentes, and Tia Koonse, “California's Hero Labor Law: The Private Attorneys General Act Fights Wage Theft and Recovers Millions for Lawbreaking Corporations,” Center for Popular Democracy, February 2020, https://populardemocracy.org/sites/default/files/PAGA%20Report_WEB.pdf.

215. Sejal Singh and Andre Manuel, “Harvard Law Students Are Taking on Forced Arbitration,” The Nation, April 15, 2019.

216. S. 610, 116th Congress, 1st Sess., introduced February 28, 2019. Democrats in the House have also introduced a bill that would end forced arbitration of sexual harassment claims (H.E. 1443) and one that would end forced arbitration for victims of data breaches (H.R. 327).

217. Winkler discusses this agenda at length in We the Corporations.