U.S. House passes bill to end forced arbitration

U.S. Capitol | Susan J. Demas

WASHINGTON — The U.S. House on Friday passed legislation that would eliminate forced arbitration clauses in employment, consumer and civil rights cases.

If enacted, the bill would empower more workers and consumers to challenge employers and corporations in court. Forced arbitration clauses — often found in the fine print of agreements — can bar employees and consumers from suing or participating in class action lawsuits. 

About 60 million U.S. workers are subject to mandatory employment arbitration procedures, according to a 2017 report from the liberal Economic Policy Institute. That number has increased dramatically in recent decades, the study showed. 

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Critics of those clauses say the process deprives employees from suing employers over issues like discrimination, harassment or abuse. Consumers can be barred from suing over scams or faulty products. Complaints are hashed out behind closed doors and the results aren’t made public. 

“Using forced arbitration, corporations force victims into secret proceedings where the deck is stacked against them,” U.S. Rep. Hank Johnson (D-Ga.), the lead sponsor of the bill, said Friday on the House floor. “Predictably, the end result is the corporation wins and the victim is deprived of justice.”

Andy Levin | Andrew Roth

H.R. 1423, titled the Forced Arbitration Injustice Repeal Act, passed the House by a vote of 225-186, largely along partisan lines. The Michigan delegation was split, with all Democrats voting for it and five Republicans plus U.S. Rep. Justin Amash (I-Cascade Twp.) against the bill. U.S. Rep. Jack Bergman (R-Watersmeet) didn’t vote.

“Forced arbitration is a tactic used by corporations to lock employees out of the court system when they settle disputes,” U.S. Rep. Andy Levin (D-Bloomfield Twp.) wrote

He said the House legislation would “restore access to justice for millions of Americans” by banning the practice. 

Two Republicans voted for the bill, U.S. Reps. Matt Gaetz of Florida and Chris Smith of New Jersey); two Democrats opposed it, U.S. Reps. Henry Cuellar of Texas and Collin Peterson of Minnesota). 

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Gaetz, an ally of President Trump, praised the legislation last week. 

“I’m convinced that big businesses’ over-utilization of mandatory arbitration clauses impairs people’s access to something that is fundamentally American, and that is having a judge and jury make a decision regarding your dispute,” Gaetz said. 

The legislation isn’t likely to advance beyond the U.S. House this Congress. The U.S. Senate version of the bill has no Republican co-sponsors, and it garnered a veto threat from the White House. It’s also opposed by business groups including the U.S. Chamber of Commerce. 

White House | Creative Commons

“This bill would prohibit private businesses from entering into pre-dispute arbitration agreements, including those allowing for the use of collective arbitration procedures,” the White House said in a statement. “These blanket prohibitions will increase litigation, costs, and inefficiency, including by exposing the vast majority of businesses to even more unnecessary litigation.”

U.S. Rep. Doug Collins of Georgia, the top Republican on the House Judiciary Committee, slammed the legislation on the House floor, calling it “simply a political statement” that has no chance at being enacted. He warned it would shut Americans out of the justice system by denying them guaranteed arbitration. “What that would do is not end injustice, but it would actually promote it,” he said. 

Still, bill’s supporters hailed its House passage as a victory for Americans, and they’ve vowed to continue to press the issue. 

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U.S. Rep. Bobby Scott (D-Va.), chair of the House Education and Labor Committee, said that companies “are increasingly using forced arbitration clauses to shield themselves from accountability from many forms of wrongdoing, including civil rights violations, labor abuses and unfair consumer practices.” 

U.S. Rep. Ted Deutch (D-Fla.) said that forced arbitration agreements “too often are the result of power imbalances that block claims from judicial remedies in employment cases and consumer cases, anti-trust and civil rights disputes.” He said the legislation to end forced arbitration agreements is “critical for protecting the rights of women in particular who have faced gender discrimination and sexual harassment in the workplace.” 

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