Hacker News new | comments | show | ask | jobs | submit login

> binding arbitration should be made illegal

Binding arbitration and non-competes, are both disgusting anti-business, anti-American, anti-worker, anti-innovation, anti-rights that need to be killed.

These two horrible tactics have crept in since 2000 into nearly everything.

Signing away your right to compete and your right to use the legal system should both be illegal and have no place in America. How did we let this happen?

For non-competes, NDAs should suffice.

Arbitration should be a step towards legal rather than supplanting it. Many times arbitration is better for both parties in terms of cost/time but when it isn't people shouldn't be signing away the right into forced arbitration to go further.




I walked away from a job offer recently. It was the first company that refused to remove their non-compete clause. They're illegal in California. In Illinois, they're illegal if you made less than $13/hr. They should be made illegal everywhere.

I know one software developer personally who has been screwed over by a non-compete. I know others who simply ignore them, which is dangerous since different states have rules differently on their enforceability.


If you don't mind my asking, what state was this in? And did you get the impression that it's treated as a norm locally?


This was in Illinois. Chicago has a vastly different hiring environment than any other place I've lived in. The interviews are long, there are a ton of behaviour questions (one interview had a solid hour dedicated to behaviour questions; and they wanted really detailed specifics).

It's a far departure from other markets I've worked in. I've personally never even asked behaviour questions during an interview, and really I think you can get a good judge of behaviour just by watching the candidate answer technical questions.

I'm not sure if non-competes are the norm. I have a feeling they might be as they recently passed laws to ban them for low income earners. I've only had one job offer, and they refused to remove it. I have no problem signing NDAs, IP wavers, patent wavers, etc. But I refuse to sign anything that restricts my right to work after a company stops paying me. If it turns out all of them do the same thing, I might have to head back to the west coast.


Is this finance in Chicago?


A company presented one to me a few years back and said that it was "standard". The non-compete covered anything tech-related (so...my job in its entirety) within 50 miles of the business (so...the entire city).

I refused to sign it.


I can say I looked up the ruling history in Oregon and the longest one that I found held was ~6months. Generally courts in OR state are narrow towards non competes. So that's at least some evidence it varies by state.


Arbitration, just like plea deals, are an obviously terrible idea that is legal almost entirely because it reduces the cost of having trials. Less trials is cheaper, which everyone running things likes.

Of course, that's trading justice for money, which most people would agree is a terrible idea. Of course, that isn't reflected in the actual state of the law.


Forced consumer arbitration has been widely adopted solely because it is used to preclude class actions. Some state courts send matters to public arbitration, which is decidedly different.

There are parts of forced consumer arbitraiton that companies do not like, but there's too much upsdie to precluding class actions. Things companies don't like include: the high up front cost and the lack of appeals.

There's nothing legally preventing arbitrators from being vehemently pro-consumer. The incentives prevent it but, legally, an arbitrator could award a crazy amount of money to a consumer on a tenuous basis and there's little that could be done. It's interesting that no such examples exist, however.


Nothing preventing them? How many companies will hire the arbitrator that is pro-consumer?

There are obvious incentives for the arbitrators to favour the people paying them - individuals are not going to be doing a lot of business with them, companies are.


> Nothing preventing them? How many companies will hire the arbitrator that is pro-consumer?

He says exactly that in his comment. There is no law stopping them from doing it.


You are right, on re-reading the intent is clear.

In my haste, I read that as "there is nothing stopping them from being pro-consumer, so there is no reason to assume that the judgements favour the businesses" for some reason.


There _are_ ways to set up arbitration to be reasonably neutral if that's a goal.

One contract along those lines that I saw basically goes like this: each party picks its own arbitrator (presumably biased toward that party, whatever). Then those two arbitrators together select a third arbitrator, who will actually arbitrate the dispute.

Of course that's not what binding arbitration clauses look like, at all.


Note that arbitration clauses obviously do not sign away your right to sue, they just force you to put in a decent effort to go through arbitration first.


> How many companies will hire the arbitrator that is pro-consumer?

Are the arbiters really hired by the company?


Generally, the company lists specific approved third party arbitration administrators as part of the arbitration clause, and that administrator is in charge of picking a specific arbitrator for a case. There’s only a handful of large arbitration associations and one of those is usually picked for most contracts. If you piss a business Off too much, they’ll remove you as an approved administrator and that can hurt. A lot. So you can’t be too pro-consumer. But also, if you show provable bias, the arbitration can be thrown out. So it’s really a fine line around callous indifference that leans towards the business, rather than outright anti-consumer.

As for the hiring part - the business pays most of the arbitration fees, but the consumer is on the hook for a nominal amount plus any attorney fees and potentially extra costs like expert testimony.


Yeah... I can see how third party arbitration can work well between corporations that each have a legal department making sure a reasonable arbiter is picked, but I'm much less hopeful about whenever a single consumer randomly ends up in this situation.


So basically the credit rating agencies scenario all over again.


Arbitration can make sense in an international setup with contracts between large companies. For example, if an American company does business with a Russian company, they might agree to do arbitration in the UK in case of a dispute.

However, what Amazon does here is just wrong.


> Arbitration, just like plea deals, are an obviously terrible idea that is legal almost entirely because it reduces the cost of having trials.

Arbitration is legal because of freedom of contract.

There is nothing "obviously terrible" about arbitration per se. When it is included in a freely negotiated contract between parties of equal bargaining power it is hard to find anything wrong with it.

The problem is when the parties do not have anywhere near equal bargaining power.


Arbitration is legal because of the Federal Arbitration Act of 1925. Before that, judges in the United States treated arbitration clauses as unenforceable despite freedom of contract. [1] It’s a bit odd that 80 years or so passed before consumer arbitration clauses suddenly became ubiquitous in the last decade, but nevertheless Congress could easily amend the law if it wanted to.

[1] https://scholarlycommons.law.case.edu/cgi/viewcontent.cgi?ar...


I mean, it's legal because no one has made a law against it. "Freedom of contract" isn't absolute - you can't sign yourself up as a slave. Consumer arbitration could be banned too.

I'm talking about consumer arbitration, which is as you say, inherently unbalanced. Yes, I'm sure there are situations where it's a good tool and I'm not saying ban arbitration completely, but right now we can see the damage from it being misapplied.


The ostensible reason for them is that "court is expensive"; if this were true, and impartial arbiters could be found, at the moment a lawsuit was required, both parties could agree to arbitration at that time: just because you are or have filed a lawsuit shouldn't suddenly mean that arbitration is more expensive or impossible.

That is, there is no benefit to agreeing to it at contract inception, if it were as stated: cheaper and impartial, i.e., a better court.


You can't really expect to maintain equal bargaining power when you're in the business of signing away your rights. I mean, what you've said makes sense if you only have one relationship with one other entity. If there are more parties involved, your loss of rights in one fair bargain may translate to a loss of fairness in another.


>Arbitration is legal because of freedom of contract.

Indentured servitude is just contracting. Do you think it should be legal too?


I think my point may have not been clear. I was responding to someone who offered a theory that it is legal because it reduces the cost of having trials. The implication is that it was decided at some point that we should allow it.

My point is that because it is implied by freedom of contract, it is by default legal until we decide to make it illegal.


> it is by default legal until we decide to make it illegal.

No, it's legal because of the Federal Arbitration Act passing in 1925. Prior to that, waiving of such rights "in advance by agreement" was explicitly disallowed, as SCOTUS determined in Insurance Company v. Morse (1874).


Plea deals are very grey areas that are susceptible to misuse, but it's also the key to moving up a chain of leadership to "take the head off the snake" often.


Deals that involve informing are a very different animal, in my opinion. I'm talking about the much more mundane, everyday case where it is just getting a lighter sentence in exchange for pleading guilty. There is a clear trend where prosecutors push for insanely overdone charges, then drop it to virtually nothing in the plea deal.

This is terrible because it leads to unjustly excessive punishment for smaller crimes if someone wants to exercise their right to trial, and people being told to just take the deal when innocent because a 1% chance of 10s of years of prison just isn't worth the risk when the alternative is you are out in months, for example.


The incentive to save money exists regardless and nowise leads to arbitration as the only option.


I'm not sure what you are saying. My point was that political support for allowing consumer arbitration to exist is increased (despite it being largely unpopular with the public), because it reduces court cases which is cheaper for the government. You are saying that there is incentive to save money, but it doesn't at all affect politician's opinions on consumer arbitration?


I'm saying consumers will already choose arbitration if it achieves the same utility, because it's cheaper for them as well. If politicians were not in the pockets of lobbyists they would see that human nature already saves the government money. I argue politicians are not motivated by saving the government money, at all -- seriously, when have they ever been?


Couldn't agree more. I called State Farm last month just to get a quote on a potential car purchase. Instead, I ended up canceling my current policy on the spot because the agent tried to push Limited Tort as if it was just an easy way to save money.

It made me so furious because most people don't understand what they're giving up, and they won't understand until they get into an accident and learn they signed away their rights years ago. The way agents sell Limited Tort gives you a completely inaccurate impression of the potential consequences.

That sort of thing should absolutely be criminal.


As a PA resident I always thought of it as spending more if you want the lottery ticket. Obviously if you never get into an accident you'll be much richer with lower-priced limited tort, but you can pay extra if you want to bet that you'll be in an accident and will be in that group that might get some money. I know all insurance is gambling, and it's definitely a personal decision.


Can you explain what Limited Tort meant in this case?


In car insurance it means you give up your right to sue for pain and suffering unless you suffer serious injuries. The PA definition of a serious injury is "a personal injury resulting in death, serious impairment of body function or permanent serious disfigurement."

So even if you're injured badly enough to need a year of physical therapy for full recovery, you would likely get no money for your pain and suffering under Limited Tort. Without Limited Tort you'd probably get anywhere from $30,000 - $100,000 for that amount of pain/suffering, loss of enjoyment of life, etc.


Out of curiosity, which insurance did you end up going with?


Would this choosing this policy option only affect payments to you the policy holder for an incident where you were at fault? Trying how understand how this works, since your insurance company usually represents you when trying to obtain compensation from others, or compensates others for damage you do.


I think most people have the same thought as you: They don't see how an agreement with their own insurer could stop them from suing someone else (or their insurer), but that's how Limited Tort works. You sign away your right to sue someone else if they injure you in an accident unless those injuries are extremely severe (loss of limb, death, permanent disability, etc.).

You can look up info on "piercing the tort threshold" if you're curious about specific injuries that are severe enough.


Do you think the additional money actually serves to offset in any way shape or form the persons suffering? If so what is the conversion factor between pain and money?

Do you think quantifying pain and suffering has a positive value even if its very hard to come up with a meaningful way to define suffering in terms of dollars?


To answer your questions:

1. Yes. Suffering isn't necessarily limited to some brief interval of time. For example, disfiguring injuries can impose suffering (employment discrimination, loss of consortium, etc.) throughout a person's post-injury lifespan. Money can mitigate burdens imposed by such effects of injury.

2. I don't know. But I would estimate the conversion factor for third-degree burns over 40% of a kid's body as greater than that of a kid's having lost a hand. YMMV.

3. Yes, I do.


> "actually serves to offset in any way shape or form the persons suffering"

If you're injured to the point where it impacts your ability to work, or you need extra care from someone... of course it offsets it.


Paying for care has nothing to do with pain and suffering. I wasn't asking the pointless question you imagine I was asking an actual relevant nonobvious question.


Perhaps you could work on rewording it to be obvious?


I'm proud to have turned down a economically-maximizing offer with a margin on principle of not signing non-competes. I understand that I was lucky to have the luxury to be able to say no and not everyone is able to do so on a different circumstance, but I believe if you have the option of taking a lower offer without a non-compete you have the moral obligation to your profession to push back and resist, and let them know that a non-compete is morally repellent.


I recently bought furniture. There was small print that said I was agreeing to the terms and conditions on the back. Historically you're used to seeing warranty and financing (if any - none in this case) information. When I flipped it over, it turned out it was a binding arbitration agreement.

For a furniture purchase.


>> For non-competes, NDAs should suffice.

With all that complaining about signing away your right to sue and work, why do you think it's OK to sign away your right to speak? Serious question.


> With all that complaining about signing away your right to sue and work, why do you think it's OK to sign away your right to speak? Serious question.

NDAs are also bs mostly but they cover company specific confidential information and possibly information on clients, contractors, employees etc. All of that is fair to not speak about as that is their property and what they are doing.

Non-competes want you to usually stop using your skills that you brought to the company, with other companies. It is really absurd when a company that wants a 6-month contract wants a non-compete for 2 years, laughable.


You can speak, just not about privileged information. With non-competes the most honorable thing they can claim is that they don't want you taking expertise they probably helped pay for you to get (either on-the-job or otherwise) and have someone else benefit from it. But really I think most of us would agree that restricting someone's right to use their own qualifications is overly broad. A better solution to that concern would be that they pay for training, if necessary, and you pay some of it back based on how much longer you remain in their employ, similar to some relocation agreements.

Not discussing confidential material shared with you on condition of your employer with an NDA is quite similar IMO to not sharing material information about a company's health days before their public earnings call. 1st amendment rights are not absolute. I'm not allowed to engage in libel, yell "Fire!" in a crowded theater, etc. I think abiding by NDA's about internal, confidential information is analagous and helps promote real, fair competition.


You just had to do it, didn't you?

Every time you say, "yell 'Fire!' in a crowded theater," a civil rights lawyer is forced to kick a puppy.


Care to elaborate? Genuinely curious here.


It was coined by a judge attempting to justify legal censorship of someone protesting the existence of the draft.

https://www.popehat.com/2012/09/19/three-generations-of-a-ha...


Thanks. I didn't know about the historical context of that argument and it turned out to be quite important.


Well that is the textbook case of 1st amendment rights not being absolute.


Well, no, it's dicta in the textbook case—Schenck v. United States, 249 U.S. 47 (1919)—of the Supreme Court getting swept aside by security hysteria and failing to protect the First Amendment; a decision whose substance was overruled by Brandenburg v. U.S., 395 U.S. 444 (1969).


I stand corrected, thank you. I recall being told specifically in 7th grade social studies that that was an actual case in the 1920's where someone did yell fire. I'm aware of other cases where the court decision was, "here's a ridiculous extreme we obviously wouldn't go to, so obviously let's just rule that it doesn't apply at all," and I hate it, so I'll stop using this :)


I don't need to tell anybody what my former employer was working on, and doing so would not even benefit me. I do need to be able to work in my field though. More often than not, one's skillset is sought by similar businesses.

Imagine a physician signing a non-compete. What's he supposed to do then? Not practice medicine and go be a consultant or something?


My sister in law is a physician, her non-compete doesn’t allow her to practice specific aspects of her responsibility in her county, any surrounding county or in a 75 mile radius for 18 months.

My nephew was asked to sign a non-compete in a sandwich shoppe, to protects the trade secrets of making a ham sandwich!


Because a company still needs some level of protection against having their trade secrets spread to their direct competitors by way of a defecting employee.


So you think a companies trade secrets are more important than a person's first amendment rights? I'm playing devil's advocate here BTW. I think trade secrets might be over rated.


"Congress shall make no law [...] abridging the freedom of speech [...]"

This is not related to 1st amendment; this is no law being passed by congress or any government body. Nothing prevents a person from speaking after an NDA is signed - they won't get tossed in jail, because no law was broken. However, after doing so, they will be responsible for any civil penalties they agreed to when they signed the contract.


I only brought in the first amendment to highlight the importance of the right to free speech. Contracts are important but perhaps some things should not be allowed in them. Many contracts are unfair, but people enter into them anyway for various reasons.


People have been trying to charge rent on ideas for just about forever. We have patents and copyrights for that purpose. Not that I'm a fan of where that have gone (the length of copyright and even 20 years on patents).


The thing with non-competes is that most businesses realize that their employees could run circles around them and out-compete them without even trying if they were brave enough to try. So they fear that. I mean, no overhead of a radically expensive office building plus its utilities and maintenance, those multiple layers of ineffective management, the executive cherry on top charging an ultra premium to make your company look good? Cut that stuff out and you barely need to charge anything to continue making a perfectly opulent living for a typical technology worker. And it's not like the office or any of those things actually add anything of value, they're all just maintained mostly through sheer force of will and tradition - things proven to fail at any moment.

So if you sign something that severely penalizes going out on your own and competing against your employer, they're going to jump on that and treat it like a lifeline because it very much is exactly that.


I had good experience arbitrating with AT&T over a missing credit for an old phone I sent in when upgrading. They didnt know where the phone was even though tracking showed they received it, and they werent giving me a credit. I tried to escalate and speak to more and more agents but ultimately I sent a letter to their legal department with a Request For Arbitration form. A paralegal from their legal department contacted me and offered me a good sum of money shortly after. Really was a smooth process..


But you didn't reach arbitration? Somebody from the legal department thought the best way to avoid legal risk was to give you money, which is how they avoided the possibly more risky legal process.


I filled out the request for arbitration. Ive never arbitrated before so I assumed that was the process. But are you saying they settled instead of arbitrating? What is the difference?


The alternative of going to trial more often has its own downsides. Similar parallels to plea bargaining. If the cost of a plea bargain or arbitration is $500, and the cost of a trial is $5000, with trials only there are many injustices that would never be pursued.


> Binding arbitration and non-competes, are both disgusting anti-business, anti-American, anti-worker, anti-innovation, anti-rights that need to be killed.

Agreed. Here's how I look at it:

If a company really screws you over, you can sue. It's a lot of time and money, but it's worth it for a big problem. But what if the problem is small?

If I get screwed out of $5 by a dodgy company, I won't bother to sue. But if they've done the same to a lot of people, a class action lawsuit makes it worth some lawyer's time to go after them.

Arbitration clauses destroy that. Without class action, we need much more vigorous government intervention. Failing that, consumers lose the trust in the marketplace, harming commerce and making everybody poorer. And we'd likely see more proactive regulation as well, reducing innovation.


You're using the legal system... by negotiating away your right to sue.

Don't sign the agreement if you don't like it.


There are some rights it should not be possible to negotiate away.

For example, a contract in which I forfeit my right to life or ownership of my own body would be considered invalid.

The same should be true of a contract in which I forfeit my right to sue. Half the point of the courts is to serve as a final arbiter when a contract is insufficient.


I tend to agree, but where does a 'do not resuscitate' order or a power of attorney fit into that?


A DNR doesn't sign away your right to life, it just asks others not to take positive action to save you. A more analogous situation would be assisted suicide, which is pretty controversial. Even then, assisted suicide is seen as a benefit to the person who's going to die, and the person who assists gets paid for it. I believe a contract which says you get to kill me in exchange for paying me (either in advance or to my heirs, presumably) would be uncontroversially invalid.

I'm not sure I see the relation to powers of attorney. Are you saying that granting PoA to another person is similar to granting enforcement rights to an arbitrator?


No, I was just referring to how someone can be granted a durable power of attorney, in which case they have license to remove the grantor from life support. Anyway, I support everything you said, and just to be clear, I'm no fan of arbitration; I was mostly playing devil's advocate.


A durable power of attorney doesn't sign away your right to life. It gives someone revocable control of your life. You can withdraw that control at any time (assuming that you have the mental competence to be able to make legal decisions). There is no way to sign away your right to life, you can always take back any rights that you give someone.


I think you did a decent job playing devil's advocate, because now that you explained it a bit more, I'm not quite sure how PoAs fit into this. Maybe it's different because it's not done in exchange for something?


That's fine until its inculcated into every commercial agreement going forward, and you have no legal power to challenge the entire system.


The answer seems pretty obvious... live a simpler life that doesn't depend on these services.


Exiling yourself from society shouldn't be a requirement of wanting equal access to the justice system.


There is zero reason not to include such a contract in every point of contact between you and society if you let people run with this one eventually the bottom of your receipt for a pound of grapes will contain such language and they'll call it a contract of adhesion.

If mandatory binding arbitration included as part of your standard interaction with businesses is a net negative for 99% of people and a positive for business owners and large stock holders there is no particular reason why the 99% can't vote not to allow the owners to do that.


That's entirely workable... if you want to not have a job, or a bank account, or a credit card.


A few months ago my car got covered in white paint from the garage of the apartment I live in. I had it detailed, which they agreed to pay for right away. They credited my account for the cost of the detail, then added it back as a rent charge when I refused to sign away my right to sue over the incident (well, the contract said basically they weren’t liable for anything that happened at all around that time on the premises. also the detailing didn’t remove the paint). They required me to pay back the money in order to make my rent payment the next month, or i would have been charged 10% of the rent + detailing charge as a fee. So yeah, avoid services like renting an apartment and you’ll be all set. Good luck!




Guidelines | FAQ | Support | API | Security | Lists | Bookmarklet | Legal | Apply to YC | Contact

Search: