What Is Forced Arbitration for Sexual Harassment?
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 on-the-job sexual harassment. The requirement typically appears in a company's policies, on-boarding materials, and/or the agreement a company asks you to sign when starting a new job. This policy often requires confidentiality. So if an arbitration proceeding takes place, you’re prevented from sharing any details about it.
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 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.
Several technology companies subsequently dropped the practice as well including Facebook, Lyft, Square, Airbnb, eBay, and Uber. Tech companies compete heavily for talent, which may be why the 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. By requiring a worker’s silence, it’s likely that companies are making workplaces statistically less safe for millions of people. Research shows that arbitration favors employers, most likely because they benefit from maintaining close, ongoing relationships with the arbitrators who decide the cases.4 By privatizing the justice system, corporations are protecting serial sexual harassers and normalizing illegal behavior. Workers should be free to take cases to court.
Ending forced arbitration for sexual harassment could also 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 subjected to forced arbitration for sexual harassment.6
Since traditionally marginalized groups are disproportionately impacted both 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 will likely may benefit companies and investors. Without access to information about cases of harassment, investors are not able to assess whether a company provides a respectful, inclusive environment for its workforce—a known indicator of profitability and positive shareholder returns.7
It’s estimated a typical Fortune 500 company loses over $14 million per year due to the absenteeism, staff turnover, and low productivity caused by workplace sexual harassment.8 Ending the practice is, therefore, a crucial step in repairing corporate culture, boosting employee engagement, and ensuring companies can continue to attract and retain high-quality workers.
What Is The Force the Issue Project?
The Force the Issue project launched September 9, 2019 and is a joint effort between Grab Your Wallet Alliance, LedBetter Gender Equality Index, and the RISE Community (Return on Investment & Social Equity). Our goal is to get companies 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.
Prior to launch of this database, we reached out to more than 200 large companies to ask if they require arbitration for sexual harassment claims. In many cases, the companies we included in this outreach had been listed in various socially responsible business indices.
In our queries, we asked 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 companies know that a lack of response would be interpreted as an indication the organization likely does require arbitration for sexual harassment claims in at least some cases. (Statistically, most companies do.9)
When companies indicated that some or all of its employees are required to use arbitration for sexual harassment claims—whether that requirement is stated in the company's general policies, its on-boarding materials, and/or its new hire employee agreements—its status in this database is listed as "requires arbitration for sexual harassment." Any additional details the company provides on how its policies are applied are included on the company’s profile page.
When companies indicated they have an opt out provision, 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 has to take in order to preserve her own rights.
This website is being used to track companies’ responses to our inquiries. When a company reaches out to us 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. All changes are tracked in the Timeline of Changes section as well as in each company’s profile page.
Many of the large 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, that informs its status in the database. We did limit the scope of our inquiries to employees for the first phase of this project. Data about a company's relationship to contractors is not captured here.
A second phase of this project will launch in late fall of 2019. This second phase will add over 600 new companies to our outreach and tracking efforts.
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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)
- 8 Lynn Parramore, "$MeToo: The Economic Cost of Sexual Harassment,” Institute for Economic Thinking (January 2018)