What Is Forced Arbitration?
Forced arbitration is a common employment practice. When you take a job that requires arbitration for sexual harassment claims, you’re usually giving up your right to sue your employer should you ever experience sexual harassment at work. The requirement typically appears in a company's policies, on-boarding materials, and/or an agreement a company asks you to sign when starting a new job. Companies often require confidentiality around arbitration proceedings. So if an arbitration proceeding takes place, you may not be able to discuss it with anyone, even your partner, family, and friends.
The arbiter is usually hired by your employer and the arbiter’s decision is binding. In most cases, appeal isn't an option. A 2018 report by the Economic Policy Institute estimates use of forced arbitration had more than doubled since the early 2000s and over 60 million Americans are now bound by it.1 Among companies with 1,000 or more employees, the EPI estimates 65.1 percent use mandatory arbitration. The National Employment Lawyers Association estimates at least 52 of the companies in the Fortune 100 require arbitration.2
On November 1, 2018, over 20,000 Google workers participated in a mass global walkout to protest the company’s handling of sexual harassment allegations. The walkout was sparked by by a New York Times investigation that revealed top Google executive Andy Rubin had been paid $90 million after the company learned of a credible allegation of sexual assault against him by an employee. Rubin was revealed to be one of three executives Google protected after they were accused of sexual misconduct. Within a week of the historic worker walkout, Google announced it had ended its policy of requiring arbitration for sexual misconduct claims.
In the weeks following the Google worker strike, several tech companies dropped the practice as well including Facebook, Lyft, Square, Airbnb, eBay, and Uber. (Microsoft ended the practice in 2017.) Tech companies compete heavily for talent, which may be why a trend developed so quickly in that industry.3 We believe it's poised to spread to others.
Why End Forced Arbitration?
Getting rid of forced arbitration for sexual harassment is the right thing to do. The practice potentially protects serial harassers and makes workplaces less safe. Research shows that arbitration favors employers, most likely because they benefit from maintaining close, ongoing relationships with the arbitrators who decide the cases.4 Workers should be free to take their cases to court.
It's possible that ending forced arbitration for sexual harassment could also help to advance race, gender, and class equity. Research has found women of color are more likely to experience workplace sexual harassment, due in part to a perception on the part of harassers that they have relatively little workplace power.5 Another recent study found that women, African American workers, and low wage workers are more likely to be subject to forced arbitration for sexual harassment.6
Since traditionally marginalized groups are disproportionately impacted by sexual harassment and forced arbitration, it's not difficult to imagine that ending this practice could help level the playing field. How much less harassment would women of color endure each year if they were more widely perceived as being powerful at work? How much time, income, and health would women gain if serial harassers were exposed and ejected?
Finally, getting rid of forced arbitration for sexual harassment would likely benefit companies and investors. Without access to information about cases of harassment, investors can't assess whether a company provides a respectful, safe environment for its workforce, a quality that has been correlated in some reports with profitability and positive shareholder returns.7
It’s estimated a typical Fortune 500 company loses over $14 million per year due to absenteeism, staff turnover, and low productivity caused by sexual harassment.8 Ending the practice is, therefore, a crucial step in repairing corporate culture, boosting employee engagement, and ensuring companies can continue to retain high-quality workers.
What Is The Force the Issue Project?
The Force the Issue project launched September 9, 2019 as a joint project between LedBetter Gender Equality Index, Robasciotti & Philipson, and Grab Your Wallet Alliance. The goal: to get companies as many companies as possible to end the harmful practice of requiring arbitration for sexual harassment claims.
The project’s launch was accompanied by a statement of support from a broad array of institutional investor groups including the AFL-CIO, Trillium Asset Management, the president of Los Angeles City Employee Retirement System (LACERS), Walden Asset Management, Natural Investments, and Nia Impact Capital. The signers of the statement represent $54 billion of investor assets. The statement is also officially endorsed by Sharan Burrow as General Secretary of the International Trade Union Confederation (ITUC).
Before publishing a company profile page, we reach out to that company to ask if it requires arbitration for sexual harassment claims. In our queries, we ask companies to let us know whether they outright require arbitration for sexual harassment claims, require it by default with an opt-out provision or simply don't require it at all.
We let these companies know that a lack of response would be interpreted as an indication the organization likely does require arbitration for sexual harassment claims. (Statistically, most private-sector employers with 50 or more employees do.9) Such companies are listed in the database as "Probably requires arbitration for sexual harassment."
When a company indicates to us that some or all of its employees are required to use arbitration for sexual harassment claims, its status in this database is listed as "requires arbitration for sexual harassment."
When a company indicates an employee must opt out of its arbitration services in order to avoid having to use them for sexual harassment claims, the company’s status in the database is listed as "Requires arbitration by default (with opt-out provision). For the purposes of this database, an opt out provision is defined as an affirmative or proactive step an employee must take in order to preserve her own rights.
The category "practices of concern" is used on the site when a company offers a response / communicates in such a way that its policy remains inscrutable even after good faith attempts to clarify. It may also be used in cases in which a company claims the full details on the company's policy are not known.
This website is being used to track companies’ responses to our inquiries. When a company reaches out to let us know it has changed its policy regarding use of arbitration for sexual harassment claims, we update the site with that information in a timely fashion. Status field changes are tracked in the Timeline of Changes area as well as in each company’s profile page.
Many of the companies we contacted are active in multiple countries, so we did not limit the scope of our inquiries to just U.S. employees. If a company requires arbitration for sexual harassment claims in any nation, it is listed as "requires arbitration for sexual harassment." We did limit the scope of our inquiries to a company's employees. In other words, a company's relationship to contractors is not captured here.
Note: when a non-publicly traded company is on the public record as using forced arbitration or similarly coercive practice (i.e. overly broad NDAs, anti-mobility clauses (i.e. non-competes), it's our policy to include it in the database due to the impact investment community's natural interest in such companies.
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- 1,9 Alexander J.S. Colvin, "The growing use of mandatory arbitration” Economic Policy Institute (April 6, 2018)
- 2,3 Jena McGregor, "Google and Facebook ended forced arbitration for sexual harassment claims. Why more companies could follow.” The Washington Post (November 12, 2018)
- 4 Alexander J.S. Colvin, "An Empirical Study of Employment Arbitration: Case Outcomes and Processes” Cornell University, ILR School (February 2011)
- 5 Dan Cassino and Yasemin Besen-Cassino, "Race, threat and workplace sexual harassment, 1997-2016” Gender, Work and Organization (June 2019)
- 6 News from EPI Press Release, "Women and African Americans are More Likely to be Subject to Mandatory Arbitration,” Economic Policy Institute (April 6, 2018)
- 7 Dr. Andrew Chamberlain, "Does Company Culture Pay Off? Analyzing Stock Performance of ‘Best Places to Work’ Companies,” Glassdoor (March 2015) // Dr. G. Kevin Spellman, "ESG Matters," Institutional Shareholder Services (Jan 2020)
- 8 Lynn Parramore, "$MeToo: The Economic Cost of Sexual Harassment,” Institute for Economic Thinking (January 2018)