Arbitration agreements: Op-Ed by Rep. Kevin Corlew
By Rep. Kevin Corlew, 02/19/2018
Legislation being considered by the Missouri General Assembly will provide a more efficient and fair arbitration system to resolve workplace disputes between employers and employees and will prevent sexual harassers from hiding their wrongs behind non-disclosure and confidentiality agreements.
So why have state representatives Lauren Arthur and Jay Barnes recently written pieces against the legislation? Based on their tortured rendering of the legislation, they either are intentionally misleading Missouri citizens for political gain, or they have not read the bill. Either way, Missourians should expect more of their legislators.
Arbitration is an age-old method of alternative dispute resolution (ADR) in which parties agree not to sue each other in court and instead to submit a conflict to an impartial person selected by the parties. The right to settle differences in an adjudicatory forum apart from the court system arises from the constitutional freedom to lawfully contract without unreasonable government interference. That is, parties can choose for themselves which forum is best to settle their disputes.
Since the founding of our country, arbitration has been an accepted ADR mechanism. George Washington had an arbitration clause in his will. Since 1980, the Missouri Arbitration Act has provided the statutory framework for enforcing arbitration agreements in this state. The Act provides that a written contract to submit a controversy to arbitration is “valid, enforceable and irrevocable” unless it violates contract law.
The U.S. Supreme Court and other state courts routinely enforce fair arbitration agreements in the workplace. But state courts in Missouri increasingly have become hostile to them and have punched holes in the statutory umbrella of the Missouri Arbitration Act, creating uncertainty. This is part of the reason businesses perceive Missouri to have one of the most litigious and unfair business and legal climates in the country. In the U.S. Chamber of Commerce’s 2017 Lawsuit Climate Survey, Missouri ranked 49th (second worst) in the country. In Missouri courts, the deck is stacked against job creators and small businesses.
If we want to attract and maintain companies in Missouri that provide good-paying jobs for workers, our lawsuit environment must improve. HB 1512 is part of the effort to restore balance to our court system. It would establish a fair and reasonable framework for employment-related arbitrations that is consistent with Supreme Court precedent and honoring of constitutional rights.
The legislation does not apply to all employment settings, but only to those in which arbitration is used to resolve workplace disputes. The bill would require employers and employees who have agreed to arbitration in a written contract to actually take their disputes to the arbitrator. The arbitrator(s) must be mutually selected by the parties—meaning that an employer can’t force the employee to use an arbitrator who the employer believes will be partial to it. At the end of the arbitration, a party can challenge the result in court if the party believes, for example, that it was rendered by corruption or fraud or that the arbitrators showed partiality, exhibited misconduct, or exceeded their powers. The court can modify or vacate the arbitration award or can order a new arbitration.
Contrary to Arthur’s and Barnes’ misstatements, employment arbitration agreements cannot be hidden from employees. In fact, under HB 1512 and the Missouri Arbitration Act, the employer must provide WRITTEN NOTICE about the arbitration clause IN CAPITOL LETTERS just above the employee’s signature line.
The requirement of a signed agreement is another way in which HB 1512 provides greater protection to Missouri workers. Whereas many states will enforce an employment arbitration provision simply if the employee continues to work on the job, HB 1512 goes a step further and would enforce an arbitration agreement only if the employee accepts the arbitration terms in writing and continues to be employed.
Next, under the principle of what’s good for the goose is good for the gander, HB 1512 requires that the arbitration agreement must be binding on both parties. That is, an employer can’t reserve to itself the right to sue an employee for a workplace-related claim under the arbitration agreement and then turn around and force its employee into arbitration on his or her claims.
Importantly, contrary to Arthur’s and Barnes’ portrayal of the legislation, HB 1512 does not require secrecy or confidentiality agreements in workplace arbitrations. In fact, with intended amendments to the legislation, employers will be prohibited from requiring confidentiality or non-disclosure agreements in arbitrations in which sexual harassment or abuse has been claimed. Thus, HB 1512 will provide protections to victims that currently are not afforded in Missouri law—sexual harassers will no longer able to hide in secrecy.
In arbitration agreements that delegate to the arbitrator the authority to decide the issue of arbitrability (i.e., whether the dispute can lawfully be submitted to arbitration), HB 1512 requires the arbitrator to make the determination. This is consistent with U.S. Supreme Court precedent and implements a long-established principle. As the late Justice Scalia once put it in a case upholding an employment arbitration agreement:
“The delegation provision is an agreement to arbitrate threshold issues concerning the arbitration agreement. We have recognized that parties can agree to arbitrate “gateway” questions of “arbitrability,” such as whether the parties have agreed to arbitrate or whether their agreement covers a particular controversy. . . . This line of cases merely reflects the principle that arbitration is a matter of contract.”
Arthur, Barnes, and their trial-attorney friends, on the other hand, want to force all employees who allege claims against their employers to file lawsuits in court. Why? Because lawyers make a lot more money in long, drawn-out court cases (most employment lawsuits take more than 2 years to get to trial) than in arbitrations (which typically are concluded in 6-8 months, even while affording claimants all of the substantive rights and remedies that they could get in court).
What the trial lawyers don’t tell you is that they won’t even represent every employee who comes through their doors. Trial lawyers are very selective about the types of cases they agree to take – usually taking only high-dollar cases, involving higher-paid employers, so that the lawyer can make money. In fact, lawyers turn away far more claims than they take. And of the employment lawsuits that are filed, less than 10 percent actually ever get to trial. The rest are either dismissed or settled.
While trial attorneys pretend to care for the rights of workers, what they really care about are their wallets. Under their proposals to prohibit ADR in the workplace, many (perhaps most) workers could never get justice for workplace wrongs because they couldn’t afford a lawyer or the high costs of litigation.
Let’s not allow trial lawyers to tip the scales of justice away from workers and toward rich and powerful attorneys. Encourage your legislators to support HB 1512, which will provide the framework for fair and efficient resolution of employment-related disputes and will prevent sexual harassers from hiding in secrecy.