Is Forced Arbitration in the Workplace Coming to an End?

Since 2001 employers have expanded the use of mandatory arbitration as a means to require employees to engage in a private interactive process to resolve complaints. Many American employees, particularly those working for large organizations, have been required to sign mandatory arbitration agreements. These agreements may also be known as Alternative Dispute Resolution agreements (ADR). The ADR process is governed by employer-paid arbitrators who establish the rules and procedures. Traditionally, arbitration has resulted in a much slimmer chance for a complainant (typically an employee) to win their case, as compared to employees who air their grievances through a traditional public court hearing.

In the wake of the Me Too movement, employers are beginning to do away with their mandatory arbitration policies voluntarily. Last week Wells Fargo announced that it is ending forced arbitration for future sexual harassment complaints. Wells Fargo is the first major U.S. bank to announce an end to the practice. Large high-tech firms such as Facebook and Microsoft have been doing away with these policies over the last few years.

Employers are advised to review their policies and guidelines to ensure they have credible problem-solving and complaint procedures that are well-known by employees. Forced arbitration agreements are no longer the preferred method for employers to avoid lawsuits or investigations by regulatory bodies such as the federal Equal Employment Opportunity Commission.