Forcing Workers to Arbitrate Disputes Is Increasing Labor Strife

The National Labor Relations Act (NLRA) leaves no doubt about its purpose. Enacted in 1935, it was set against a backdrop of decades of intense and often violent labor strife. Recall the massacre of striking coal miners at Ludlow, Colorado (1914); the bloody Battle of Blair Mountain in West Virginia (1921), which pit miners against the militia; and the West Coast Longshoremen’s Strike (1934) over union representation, which revealed organized workers’ enormous power over the nation’s economy.

The NLRA was designed to minimize strife by requiring employers to recognize employees’ efforts to engage in “mutual aid and protection”; adjudicating conflict so as to avoid direct action; and, to quote from the act itself, by “encouraging practices fundamental to the friendly adjustment of industrial disputes … and by restoring equality of bargaining power between employers and employees.”

Employers, naturally, prefer to deal with their workers one on one. But workers have shown throughout history they will not abide by this unfair practice. They organize, they work together, and, when their employers refuse to deal with them all at once, they strike. Workers engaged in, and prospered from, collective action long before passage of the NLRA. The law merely sought to regulate this action for the public good, to replace strike with negotiation, conflict with cooperation.

History is now repeating itself; labor strife is increasing, thanks in part to the rise of legal contracts that force workers to settle disputes in a rigged system of arbitration rather than an impartial court of law.

In 2018, the U.S. Supreme Court in Epic Systems Corp. v. Lewis concluded that class action litigation does not fall within the NLRA’s protected activity of “mutual aid and protection.” This meant that the Federal Arbitration Act (a law that the high court misinterpreted decades earlier) allowed corporations to force workers to arbitrate workplace disputes individually by making them sign arbitration agreements as a condition of employment.

This ruling dealt a major blow to workers’ rights. If, for example a company steals wages from 100 employees, they would now be forced to deal with the company one on one, in an arbitration process that structurally favors their employer. Unsurprisingly, companies vastly prefer this option; now, roughly half of the nation’s workers are subject to forced arbitration agreements.

Companies that impose arbitration agreements no doubt suppose that employees will meekly submit to their fate and accept the terms given. But like the robber barons of the last Gilded Age, they are wrong.

Rising Strife

In the last few years, workers have united against forced arbitration agreements. In 2021, Activision Blizzard employees engaged in three work stoppages to protest a toxic corporate culture, sexual harassment in the workplace, and the company’s use of forced arbitration agreements. In response, CEO Bobby Kotick pledged to waive arbitration in certain cases, although the extent of his promise remains unclear, particularly with Microsoft’s potential acquisition of the company.

Of perhaps greater note was the November 2018 walkout of 20,000 Google employees to protest the megacompany’s failure to properly respond to workplace sexual harassment. Again, forced arbitration provisions were a specific target because they made it much harder for survivors to hold the company responsible.

The walkout was hardly a strike: It lasted 15 minutes and wasn't intended to apply economic pressure. But the impressive show of force nonetheless had an effect: Google almost immediately made concessions, including ending forced arbitration of sexual harassment cases.

Still, much more needs to be done to protect workers’ rights and stave off strife. Thankfully, lawmakers are taking some action. In a rare moment of bipartisan unity, Congress recently passed the Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act of 2021. While a great step in the right direction, the bill leaves racial discrimination, wage theft, and other areas still subject to arbitration, as my colleague recently explained.

Congress ought to ban forced arbitration in all cases. The FAIR Act would eliminate predispute forced arbitration in employment, consumer, antitrust, and civil rights cases. Forced arbitration benefits bad actors and undermines the legitimacy of our law and our justice system. Ending individualized arbitration of workplace disputes would allow workers to once again seek accountability in the courtroom, and it could help reduce labor strife at the same time.