Monday, April 21, 2014

General Mills drops arbitration clause!

My friend Paul Brand of Public Justice is reporting this morning that General Mills has dropped a controversial plan to use forced arbitration for all its disputes with consumers. The General Mills plan was particularly aggressive. It would have claimed that consumers consented to its forced arbitration plan just by visiting its web page -- whether or not the consumer clicked on any button indicating knowledge of, let alone consent to, its forced arbitration plan.

After just a few days of public protest about the plan, General Mills reversed itself and has abandoned the plan.

This is good news for employment law. Some companies used forced arbitration with their own employees. These plans required that as a condition of employment, the employee gives up the right to go to court about any claim that the employer engaged in illegal discrimination or retaliation. When companies have the same arbitrator conduct two or more arbitrations, then the company wins 86% of the time.

The public uproar and corporate reversal signal the growing concern about forced arbitration clauses. One 2012 study found that 59% of Americans oppose forced arbitration, including majorities of both Democrats and Republicans. The Employee Rights Advocacy Institute For Law & Policy and Public Citizen commissioned the study with funding from the Public Welfare Foundation.

More public attention can help legislators on both sides see that forced arbitration is an issue the public cares about. Our legislators can do something about this right now. They can co-sponsor the Arbitration Fairness Act (AFA), HR 1844 and S 878. Already, 71 Representatives and 23 Senators have co-sponsored the AFA. The AFA would ban forced arbitration from consumer and employment cases. Congress has already banned forced arbitration from the employment contracts of military contractors, the contracts between auto manufacturers and their franchisees, and from all cases under the Sarbanes-Oxley Act. How about the rest of us?

To me, arbitration is fine when both parties agree to it after the dispute has arisen. Also, when companies and unions agree to arbitration, the scales in influence are balanced. The arbitrator will know that the decision to select an arbitrator was a mutual one. But when an arbitrator knows that the company forced the arbitration on the other party, then the arbitrator will also know that future employment will depend keeping the company happy. That is just not fair. Congress should pass the AFA now. Follow this link for more information from the National Employment Lawyers Association (NELA).

By Richard Renner

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