Thursday, May 17, 2018

The Demise of the Forced Arbitration Clause

In an effort to improve transparency, Uber and Lyft recently ditched their mandatory arbitration policies for sexual assault claims. This decision follows after Microsoft Corporation chose to waive its arbitration requirement for sexual harassment claims in its applicable contracts back in December.

This trend does more than just provide victims of sexual assault a choice of venue. By eliminating the mandatory arbitration clause for sexual harassment claims, a victim may now choose to speak publicly about the facts of his or her case. The way a company reacts to these claims may no longer be confidential and may consequently set the tone for how that company is portrayed to the public in terms of its workplace culture.

The “Me Too” movement this year paved the way for a public conversation about sexual assault and made it became apparent that the ability to speak openly about it is a powerful tool to implement change. Uber and Lyft’s recent decision to delete their mandatory arbitration provision will act as a similar mechanism to implement change. By taking these claims to court, victims and employers have the potential to set workplace sexual harassment precedent. Additionally, it serves as a deterrent, as these claims will no longer be muted by a confidentiality agreement and the perpetrators, stories, and outcomes of these cases will be public.

However, although it is eliminated for individuals, Uber is still enforcing the private arbitration requirement on class-action suits. Many members of the public are upset by this decision, since class-action lawsuits usually gain more attention and are typically more capable of producing societal changes.

Nonetheless, Uber, Lyft, and Microsoft all made the decision to improve legal dispute transparency. This is a step in the right direction for victims of sexual assault in the workplace and for victims who were assaulted through company services. It is also a positive decision for the world of labor and employment law, as these cases will now have the opportunity to be heard in court and provide precedential value. It’s hard to say who will be next to follow the trend in eliminating confidential arbitration agreements. It is likely, however, that this is just the beginning. In the meantime, employers should consider the impact their dispute resolution policy may have on employees and individuals.