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What Happens When You Try to Sue Your Boss (bloomberg.com)
246 points by electricwater 52 days ago | hide | past | web | favorite | 178 comments



Ok, so the reason we have arbitration at all is to save the courts time. This makes sense.

This seems like such an easy problem to solve too. Just don't let the company or the worker pick the arbitrator. Require by law that the arbitrator be picked by a judge, or be randomly assigned by the court system, who has presumably vetted the arbitrator.

The main problem with these things is that the arbitrator is picked by the company, so they have a strong incentive to favor the company. Arbitration wouldn't be so bad if the inherent bias is removed.


The problem is that companies favor arbitration because arbitration tends to favor companies. If arbitration were truly neutral, and it were easy to access with low costs to the consumer, companies would stop using them.

So even if companies don't pick the arbitrator, arbitrators still have an incentive to find in favor of companies.

Additionally, small claims court already basically works like what you're describing, no jury just one arbitrator not picked by either side--the judge.


Restructuring arbitration for neutrality and thus cannibalizing arbitration as an industry seems like a fine outcome to me. Feels a bit like the payday loan industry: I'm sure it does some people some good, but it's largely just predatory and throws people into a rigged game. We'd be better off with less of it.


An underappreciated facet of payday loans is that without them desperate people would borrow from unsavoury people - making them illegal drives the high risk loan business underground into the hands of the Mafia. And then the consequences for the desperate people for defaulting is no longer bankruptcy, but broken legs or worse.

I agree we should have less of it, but all legislation should be mindful of the consequences of certain types of restrictions.


I was told that the mafia in the US lost a lot of business with the rise of credit cards but I can't find a source for that. Some researchers say that people turn to payday loans not only because they don't have access to bank loans but because the charging structure for payday loans is transparent and up-front:

"But most of the RiteCheck customers I interviewed had done the math and found that it was less expensive to use RiteCheck than to use a bank. In their experience, required minimum balances and fees for everything from ATM usage to account maintenance were going up."

https://www.philadelphiafed.org/community-development/public...

PS I'm not sure I'd call the payday lenders savoury myself, though they be less unsavoury than loan sharks.


In the case of payday loans I don't think we have to worry about throwing the baby out with the bathwater. The number of people that will literally start turning to the Mafia for loans has got to be minuscule.

On the other hand, the number of people who will no longer be bent over a barrel every day will be significantly improved.


The demand is not really "pre-existing", it's one created by the payday loan industry to a large extent. Especially by advertising their use for buying consumer goods. What tends to happen is not that people go to the Mafia (traditionally they come to you!), but that people make creditors of their utility companies and landlords by deferring payment.

(The older alternative to unsecured very high interest short term loans is those secured on valuables - the pawn shop).


I'm not sure about the laws in your locality (in the UK you have to have a licence from the UK Office of Fair Trading to offer consumer credit), but I would generally support banning anyone other than payday loan companies from selling very high interest loans - high interest loans from utility companies and landlords strikes me as an obscenity.

> What tends to happen is not that people go to the Mafia (traditionally they come to you!)

The mob definitely loans money at high-interest:

http://archive.boston.com/news/world/europe/articles/2009/03...

https://en.wikipedia.org/wiki/Loan_shark#Post-criminalizatio...


(also in the UK)

> high interest loans from utility companies and landlords strikes me as an obscenity.

My point is usually that this is a lot cheaper, since these don't usually charge interest at the payday rates. Utility companies have barriers to cutting you off.

But ultimately people who have negative cashflow week-to-week are going to get in trouble. Limiting how much debt they can get in causes them to hit the buffers earlier, but less hard.

(Incidentally, this is yet another major problem with "universal credit": paying it on a 6 week delay is designed to force people to use payday lenders!)


No, the demand is created by the people who are desperate. Let's not put the cart before the horse here. They're not going to go away even if the services do.


Why not cap the maximumum interest rates?

Switzerland, not really a communist hell hole and quite liberal in economic matters, for example, caps annual interest rates at 15% annually.

You don't see more broken legs than anywhere else.


If you cap maximum interest rates then people who are deemed too 'high risk' will be refused credit. As a result, they will seek credit elsewhere.

Switzerland is a wealthy low-crime country to start with, the mafia do not have a strong hold. For example the homicide rate in Switzerland is 0.54 per 100,000 people, by comparison in the United States it is 5.35 per 100,000 people.


>>> An underappreciated facet of payday loans is that without them desperate people would borrow from unsavoury people - making them illegal drives the high risk loan business underground into the hands of the Mafia. And then the consequences for the desperate people for defaulting is no longer bankruptcy, but broken legs or worse.

> If you cap maximum interest rates then people who are deemed too 'high risk' will be refused credit. As a result, they will seek credit elsewhere.

You could solve the loan shark problem and cap the interest rate by socializing the rest of the risk through some mechanism -- say a regulation that requires TBTF banks to offer payday loans and make up for the loss through their other products. Obviously there are details to be worked out, but the burden of a policy to combat loan sharking does not have to fall on the most vulnerable.


>say a regulation that requires TBTF banks to offer payday loans and make up for the loss through their other products

but if banks are forced to make loans at a loss, aren't we effectively subsidizing people that don't repay loans? you might think this is a noble goal, but I'd doubt many people will be on board.


> but if banks are forced to make loans at a loss, aren't we effectively subsidizing people that don't repay loans? you might think this is a noble goal, but I'd doubt many people will be on board.

Perhaps, but I have little sympathy for the feelings of the better-off people who want to clutch every penny to the point that they are jealous of the help the needy might get. If they're able to block reforms, then I think efforts need to be made to change their attitudes.


Most people will default before they will go to the mafia, which I think is a better solution than a payday loan


I'm struggling to follow your argument. You can also default on a payday loan - I think defaulting is better than the mafia, which is precisely the benefit of payday loans - they add in a step where you don't go to the mafia.


The problem is that pay day loans are typically pretty small <$500 and meant to be short duration 1-8 weeks, meaning that if it’s a $500 loan out for one month @15% that is $6.2 in interest, it is going to cost more than that to process and administer the loan, let alone funding costs, default risk, etc.


Which may explain why the businessmodel just doesn't exist in Switzerland.


you'd presumably want to keep interest at around the level required to cover the defaulting rate, plus costs of operation. Any lower and you're essentially providing handouts - there's an argument to be had for that too (e.g. UBI, negative income tax) but it's a separate topic.


you'd presumably want to keep interest at around the level required to cover the defaulting rate, plus costs of operation

Add: Plus a profit to that

But that seems to be covered. There are multiple banks who will provide credit to consumers at lower interest rates than that and obviously still can make a profit.

Car loans are usually lower than that. Mortgages go for between 1 1/4 and 2% (last time I looked).

The maximum rate of 15% is usually applicable for credit card debts.


(I work in a bank with unsecured loans).

There is a saying, you can accept any customers you want as long as the price (interest rate) is correct. As a group you can manage this pretty well. For some segments of unsecured loans the default rates are high enough to warrant those interest rates. The customers who score better gets lower rates as there is competition in the market and they often shop around. Having too high rates gives a lot of not taken up loan offers which the managers hate.

Car loans are almost impossible to lose money on especially the secured ones. It becomes a question of "how much can a person damage a car before it being repossessed". Usually the car is fine and one gets the money back as long as you don't loan out more than you expect can be recovered after said damage. That's why you can give so low interest rates. Unsecured car loans are much more expensive and often requires full coverage insurance.

So yes, one can give out loans to lower interest rates than 15% but then you have to cut off the lower scoring customers that would not be profitable with that rate.


It's interesting that the mortgages in Switzerland can go that low. I remember that in the eurozone banks are earning negative interest on their reserves due to european central bank policy. I doubt that you would see 1.25% mortgage rates if this were not the case- it very well may be that these rates are not profitable, but are at least less unprofitable than letting the money sit in reserve.


"Payday loans - we're slightly better than mafia!"

You might want to rethink that slogan.


On the contrary, I think you summed up my feelings pretty succinctly. Was there something I wrote that led you to think I felt otherwise?


I think the issue here is that in an ideal world, neither would exist. The original reply to your comment suggests that this is not even being considered and thus is satirizing your rationale.


I think that's a charitable reading of the parent comment. I thought I made it clear that in an ideal world payday loans (and the mafia) wouldn't exist, so I'm not even sure what kind of ideal world the parent comment is suggesting.


I'm fine with doing away with arbitration in most cases, but I'd rather just do that directly.

My point is that it's hard to enforce neutrality, because there is always an implicit incentive for arbitrators to find in favor of big companies. Even if those companies aren't directly choosing a specific arbitrator, big companies in the aggregate are the ones primarily driving the business.


> The problem is that companies favor arbitration because arbitration tends to favor companies.

That's only because they are paid by the companies (and picked by the companies). If the companies didn't pick and the payment came out of the disputed amount or the loser paid, then they wouldn't have an incentive to favor the company.


An article in Harvard Negotiation Law Review points out that courts can order arbitration if both parties agree to it, but cannot control the mechanisms of the arbitration. Therefore, if the company is paying any portion of the arbitrator's fee and the company is not leading in the process, they can elect to not pay the arbitrator's fee. In which case the arbitration fails and the case is dismissed. It appears to be in the plaintiff's interest to prefer mediation over arbitration. In essence, arbitration is broken.


Think about it from the arbitrator's point of view - who are they going to get repeat business from?


I think you may have missed the rest of my comment.


Who pays the abritration company? The employer.

Does the arbitration company make money when the employer doesn't? Nope.

Will the arbitration company force bribe money (Fine, Civil Suite) to make the problem go away? Nope.

Will the arbitration company put someone in jail for comitting a crime? Nope.

The entire point of arbitration is to eliminate the courts. "Tendancy" is the spin word, it leaves open the possibility the arbitration comapny might rule in favor of the employee. They will literally never do that.

E.g. Google's executives harassing women then using binding arbitration to remove their ability to sue them, which irregardless of the merit of the case, would be dismissed by the arbiter every time. Took a company-wide revolt to get them to stop. I'm beyond sure if the could've gotten away with literal beating and raping women they would've, and nobody wants to deal with the horror show executives participating in that kind of behaivour would become when they started down that road.

The problem with this approach is, the courts are there to avoid people exacting justice on their own terms which I'll remind you in our history, we've done quite a few times and it doesn't work out well. Sitting a mob of strangers down and having them pass down a ruling is a much better approach. Remember, 17 guns in america per man women and child and growing.

You do not want the setiment if corporations existing to literally eat people alive or that executives would shoot their own families for money to continue to grow. You don't want to let the faith in government and the courts wane over this BS. We've got a good thing going on right now in the US, it'd be a shame to throw it away over something as banal as executive pay or stockholder income.


Arbitration is also a lot cheaper than going to court, so companies would save money on arbitration even if arbiters were slightly less likely to side with them than courts.


Assuming arbitration is also cheaper for potential plantifs, and assuming a truly neutral arbitrator, then that's not likely true.

Court costs are a greater barrier to the side that doesn't have a full time legal team.


Not exactly. Most plaintiffs attorneys are working on contingency, i.e. a percent of the judgment. Going to court costs the plaintiffs themselves nothing. They only need to have a case with a decent enough chance of winning or settling for enough to make it worth the plaintiff attorney’s time.

Also, almost no one has in house litigators. So companies being sued also have to shell out for counsel by the hour.


>Most plaintiffs attorneys are working on contingency.

I very much doubt that. The vast majority of disputes that would end up in arbitration are smaller contract disputes, not personal injury claims.

>Also, almost no one has in house litigators.

They have counsel on retainer, and some companies still do. All big companies would if forcing customers and employees to accept arbitration wasn't an option.


> The problem is that companies favor arbitration because arbitration tends to favor companies. If arbitration were truly neutral, and it were easy to access with low costs to the consumer, companies would stop using them.

Another important factor is that arbitration is often used by companies as a way to shield themselves from class action lawsuits. Even if arbitration were fair with low costs to the consumer, no one would go through it individually to collect a $10 damage.

If a million employees each suffered $10 in damages from a particular action of a company, there needs to be a way for them to collectively pursue damages.


One thing that could fix this would be making the decision for arbitration binding on companies. Basically, once a company picks arbitration, it can’t ever go back. Then make it so someone other than the company picks the arbiter. This would go a long way towards removing perverse incentives.


> One thing that could fix this would be making the decision for arbitration binding on companies

This is how arbitration works. Non-binding arbitration is called mediation, and is basically glorified group therapy.


I should have phrased it better. I am not talking about an arbitration case itself, but the decision to use arbitration as the means for settling disputes. If company decides to use arbitration in 2018, then in 2020, they are not allowed to change their mind to not use arbitration. Deciding to use arbitration locks the company in. Thus, the various arbitration providers don't have any concern that if their decisions are not friendly to the company the company will stop using their services.


This is how every arbitration clause I've seen is structured. I think it's a good idea to write that restriction into law, given anyone deviating from the norm is probably tryin to game the system to their advantage.


You denigrate it but it works well in many situations where parties want to rea b a profitable agreement.


> Ok, so the reason we have arbitration at all is to save the courts time. This makes sense.

Honestly I think it does _not_ make sense. If courts are too overloaded, then we need more courts or we need to change the laws/processes that overload them.

> This seems like such an easy problem to solve too. Just don't let the company or the worker pick the arbitrator. Require by law that the arbitrator be picked by a judge, or be randomly assigned by the court system, who has presumably vetted the arbitrator.

> The main problem with these things is that the arbitrator is picked by the company, so they have a strong incentive to favor the company. Arbitration wouldn't be so bad if the inherent bias is removed.

I think these are good ideas, but I think there's another very big one to consider: why should anyone be allowed to choose arbitration before the dispute at hand arises? I simply think it should be disallowed. I always here people supporting arbitration say stuff like "it's better for both parties", but if that's actually the case then both parties would choose the arbitration at the time of the dispute. Allowing people to tie themselves to arbitration ahead of time entirely removes the incentive to actually provide a fairer and better process to both sides.


I agree with you on all counts, but just to play devil's advocate if you had to mutually agree to arbitration after a dispute arises, odds are likely in bitter disputes one side will refuse only to cost the other side more money in legal fees.

I don't think that's enough of a reason to disagree with your point but it's certainly one to consider, especially if one side has a lot more resources and jurisdictionally each side will need to pay their own legal fees.


> I agree with you on all counts, but just to play devil's advocate if you had to mutually agree to arbitration after a dispute arises, odds are likely in bitter disputes one side will refuse only to cost the other side more money in legal fees.

Honestly I think that you shouldn't have any inherent right to arbitration. You should have a right to access to a court. Arbitration should only there if both parties agree to it. If one party doesn't agree because they want to make it more expensive for you, so be it. I mean I can't really see what's fundamentally different than someone deciding they want to force you to a court trial for that reason versus them forcing you for another reason. It's just a legal strategy at the end of the day. If they are truly acting in bad will, they should be assessed court fees down the road. I know that that's difficult in the US court system, but that is a problem that should be fixed with the court system not by just side-stepping it with arbitration.


You don't have any inherent right to arbitration. You _do_ have a right to access to a court. Arbitration _is_ only there if both parties agree to it.

Your perfect world is captured by current employment contracts. Both sides agree to arbitration and then both sides stick by that agreement.


> You don't have any inherent right to arbitration. You _do_ have a right to access to a court. Arbitration _is_ only there if both parties agree to it.

I know this is the case and I believe it is generally the way it should be (ecxept of course the fact that the agreements can be entered into prior to the disputes). I was responding to the devil’s post by basically pointing what you wrote here.

> Your perfect world is captured by current employment contracts. Both sides agree to arbitration and then both sides stick by that agreement.

I’m not sure what point you’re making here. I think that agreements by parties to restrict themselves to arbitration regarding disputes that have not yet arisen should be legally unenforceable. I think it would improve the arbitration system in every way. (This was essentially the argument of my first post.) Are you disagreeing with me?


>Both sides agree to arbitration and then both sides stick by that agreement.

Unless because of career specialization, location, imperfect markets...whatever, you only have access to employers who insist on arbitration as part of the terms of employment.

One side agreed to it, and one side was coerced into agreeing to it.


> If courts are too overloaded, then we need more courts or we need to change the laws/processes that overload them.

This is certainly true, but many parties are mutually benefited by resolving some disputes via a neutral arbiter rather than the courts. It's just another example of where private companies can be more efficient than legal bodies.

There are just more inherent costs in a legal court of law.


I don’t disagree, but I don’t believe this is an argument against my claim that the choice of whether a dispute should go to arbitration should not be made before the dispute arises.


Aren't there already systems in place within the legal system to allow this? Like small claims court or appealing a parking ticket, where you present the case to one judge and they decide rather than holding a full trial before a jury.

I don't see why relying on one arbiter saves any more time than relying on one judge. Is it that the arbiter would be less qualified/lower paid than a judge?


To be legal, arbitration must be fair and protect the legal rights of both parties (although enforcing that requirement is obviously difficult). But arbitration doesn’t have to be as formal as a regular court, and that informality is supposed to save a lot of money, so US law actually prefers arbitration when it’s an option.


Small claims is capped at very small values. $5000 in VA. $5000 (corporation) or $10000 (individual) in CA. Too low for sexual harassment or other career-impacting transgressions by an employer.


It's basically small claims court except with possibly less qualified people and for larger amounts of money.

Small claims is like that specifically because it is a small amount of money.


Yes. For example to NLRB and CFPB and the FTC and the EPA and every other agency the curtains us govt is trying to kill.


IANAL, but why not just have a special labor court with more judges to be the nonbiased arbitrators? Or use retired judges to be like “independent contractor” arbitrators as a special division of the courts?

(I’m also not sure what the requirements to be an arbitrator are so please correct me).


This is what we have in Germany. It's called "Arbeitsgericht" ("labor court" basically) and as an employee you can go there and sue your employer.

For employees this is free in the first instance and you will have a neutral judge to rule about the situation. I think you don't even need a lawyer as an employee but just "file a case" with the court, but I'm not totally sure about that.

Anyway, it's a very important part of the system in Germany, those courts keep a lot of cases with work-related topics away from the "normal" courts while still providing a neutral platform for both parties.


> (I’m also not sure what the requirements to be an arbitrator are so please correct me).

It most cases the only requirement is a pulse.

There’s usually no mandatory legal or industry training.


While true, arbitration is a popular side gig for retired judges: https://www.americanbar.org/content/dam/aba/events/labor_law... [PDF]


In England and Wales there are Employment Tribunals. These are run by a government appointed judges in an informal manner that should let people represent themselves. They include a conciliation service.

There are time limits on when a claim can be made and - if monetary compensation is ordered - how much can be paid out [1][2].

https://www.citizensadvice.org.uk/work/problems-at-work/empl...

In 2012 the government imposed a £1200 (from memory) fee for taking a case to tribunal. So a low wage employee without union representation who was harassed out of a job or unfairly dismissed would have to: File a complaint while looking for a new job. Pay the fees during or after a period of involuntary unemployment. Prepare their case while working their new job. Arrange time off for themselves (and witnesses) and pay for transport to the hearing(s). Make their case. Possibly receive compensation totalling a few thousand pounds.

Claims dropped a lot and it was five years before the Supreme Court told the government to knock it off.

It's rough (and precarious) at the bottom. There have also been large cut backs in legal aid for dealing with the "proper" courts (and not just for civil cases[3]).

[1] The tribunal can also order an unfair employer to give the employee their job back or change their employment conditions.

[2] I think there are differences for cases involving some forms of discrimination.

[3] https://www.lawgazette.co.uk/law/nigel-evans-rues-backing-fo...

Edit: formatting.


Germany already has those.


We have the NLRB


Courts exits to protect citizen rights and, ultimately, protect democracy.

Creating ways to circumvent the legal system (e.g. plea bargains, private arbitration and so on) is rarely done in good faith.

No law of physics prevents the creation of a cheap, equitable and efficient legal system.


How about we reduce the court load by instituting loser-pays tort reform.


Beware of this. "Loser pays", implemented literally, would be a bad thing. What you should do, which is what England has, is "the party whose unreasonable behaviour led to the case coming to court pays". Can someone suggest a concise way of expressing that, to help voters avoid a bad tort reform?

In case it's not obvious, here's an example of where it matters. Alice damages Bob's car. Bob offers to settle for £100. Alice says, no, I want £500. Bob says, don't be silly, you can have £150, though that's too much, in my opinion. Alice sues Bob. The court decides that Alice should be compensated, so Alice "wins", and damages should be £80. Who should pay the court costs of £500? (And what if the damages were £300?)

Perhaps everyone already understands that "loser pays" means "the party whose unreasonable behaviour led to the case coming to court pays", but I can't help being suspicious that a reform of the legal system that would drastically reduce the number of cases coming to court might be sabotaged in some way by the people with vested interests who will implement it.


> In case it's not obvious, here's an example of where it matters. Alice damages Bob's car. Bob offers to settle for £100. Alice says, no, I want £500. Bob says, don't be silly, you can have £150, though that's too much, in my opinion. Alice sues Bob. The court decides that Alice should be compensated, so Alice "wins", and damages should be £80. Who should pay the court costs of £500? (And what if the damages were £300?)

Ok, you lost me on the part where the at-fault party (Alice) is owed compensation by the not-at-fault party (Bob). This makes absolutely no sense.


> Alice damages Bob's car.

He just inverted the names: Bob damages Alice's car.


This effectively makes it impossible for a small plaintiff (or defendant!) to justify the risk of fighting anyone with a multi million dollar legal team at their disposal.


If the case is likely to win, then a lawyer or investor will pony up his own cash for a cut of the outcome. This means that only cases that people feel are overwhelming will be litigated. Marginal cases to bleed your enemy dry do not work, because they work against you.


Isn't that a bad thing since likely to win doesn't map directly to being right? For example, even if I was seriously wronged, my opponent could have access to greater legal resources, or my position could be socially unpopular, or the situation could be difficult to prove, etc.


then a lawyer or investor will pony up his own cash for a cut of the outcome.

This is outright illegal in countries where lawyers are not allowed to work on contingency and may get a lawyer barred.


Certainly litigation in the UK can be very difficult to stop once started as if either side gives up there is a good chance they will be expected to pay the other sides fees up to that point.


In the UK, claimants using a 'no win no fee' deal usually buy After The Event insurance to protect them against having to pay the other sides' costs.


> Just don't let the company or the worker pick the arbitrator.

That's already the case. If the company and the worker can't agree on an arbitrator, they each pick one, and then the two get together and agree on a third arbitrator to use. Or a judge will pick one. The employee is not required to accept whatever arbitrator a company picks.


American court decisions are strongly based on precedent. If these contests were to move through the court system naturally for a few years, don't you think that over time the volume of work would diminish as each decision became precedent for the next?


from what I understand, arbitration is a way to come up with a resolution if possible before taking case to court. If arbitrator decision doesn't seem just to employee then why don't they appeal for court? Who own the cost of court proceedings in such scenario, company or employee? But given the exorbitant legal fees its not is favor of employee to take this route.


Because you signed a contract to abide by the outcome of the arbitration proceedings (i.e., it's "binding"). If you appeal, the judge will toss it out and you'll have wasted your money.


This is not really obvious if you’re not from the US. In Poland (and I guess other continental Europe countries) you can appeal to a regular court. The possibility to appeal to court is considered one of the basic rights one has.


that should be illegal, it should be impossible to waive a basic right. this will affect poorer people much more, as they have less experience, money to invest into a good lawyer and job options. it's not a fair process.


Exactly. Funny when unions go to arbritration, it’s always a big todo.p and terrible thing.


It's absurd that you can actually waive any of your legal rights... Seriously, this is bonkers.

After the #MeToo movement revealed that forced arbitration has been used to keep sexual harassment complaints quiet, a handful of companies, including Google and Facebook Inc., agreed to get rid of it for harassment claims

Wow, how noble of them. How about getting rid of all of that BS?


Waiving your right to first go to court seems reasonable enough provided you cannot waive the right to appeal arbitration in court.


How can you appeal the arbitration in court? Pretty sure you agree (when signing away your rights) that you will hold the arbitration result to be binding and you give up any potential court remedy. IANAL though.


In particular I have in mind issues of law. Things like whether a business should be allowed to withhold deferred compensation from an ex-employee who takes them to an arbitrator. Or whether a bonus for the previous year, already announced, is deferred compensation or future compensation, and therefore cannot be withheld after a layoff early the next year. Obviously some of these things are policy issues to be settled statutorily, but some also are exactly the sorts of issues to be settled by courts in the absence of statutory law, and some may involve invalidating unconstitutional statutes or parts of them.

Appeals of procedural matters also should be allowed, naturally. And procedural errors in ascertaining the facts of the case should cause de novo arbitration (or removal from arbitration and into a jury trial, if the arbitrators insist on making the sort of procedural errors that call their fact finding into question). Otherwise, fact-finding by arbitrators should not be subject to appeal, as allowing them to so be would greatly diminish the utility of arbitration.

Another thing to appeal would be the method of selection of arbitrators, the validity of their credentials, etc. But there should be fairly high bars to these (not sure how to construct them).


I believe they were talking about an alternate world where arbitration decisions would be appealable, not the world we live in.


Are you sure? https://law.freeadvice.com/litigation/appeals/arbitration_ap...

Granted, the appeals are unlikely to succeed, but perhaps that is because arbitration typically has an approximately fair outcome? Appeals of typical court cases aren't likely to succeed either, but we don't say that court is therefore unfair.


Yes, I'm sure, because I read your link, which says that you can't appeal the facts of the case or the merits of the decision, you can only appeal the process, which, in its own words, provides "a high standard of deference to the arbitrator."


You're generally not going to be able to appeal either of those things in court, either, is my point.


It may be your point, but it isn't the point under debate. We are talking about whether or not the courts provide a check/balance for the decisions of the arbitration system.

They do not.


What makes the most sense is that both sides have the option to accept arbitration before any trial starts. This way, routine cases can be dealt with in arbitration, and more complicated ones at trial.

What needs to be avoided is

* people being pressured into arbitration in return for something (e.g. Accept arbitration or don't get a job) * people opting into/out of arbitration based on rulings. So, no deciding to move to arbitration because you don't like a judge, nor deciding to go for a trial if arbitration isn't going your way.


I thought exactly the same. In my country, and I believe many others, that is not possible, no matter how many times I sign.


> It's absurd that you can actually waive any of your legal rights..

"You have the right to remain silent. So, we're just gonna go home now. Bye."

A right that you cannot waive is more of an obligation, even if it's an obligation that in theory is to your own benefit.


There’s a difference between a right which you can choose not to exercise at a given moment, and a right which you can waive in perpetuity.

Your example is the former. You can choose not to remain silent. However, you do not waive the right! At any time, you can stop talking.

Binding arbitration clauses are the latter. It’s not just a matter of choosing to use arbitration. You also permanently give up your right to use the courts for that matter.


> A right that you cannot waive is more of an obligation, even if it's an obligation that in theory is to your own benefit.

This is one of the silliest sentences I've read today. An obligation is you had to do something. While a right is something you can choose to exercise or not. With the right to be silent, you never waive that right as in they can never force you not to be silent. What you do is you exercise your right to be silent or you don't. You can decide when and if you speak.


The distinction between waiving and not-exercising a right is a bit of a gradient, though. Most contracts entail at least one party incurring future obligations. Any of these obligations, by virtue of not existing in the first place, will waive one’s pre-existing rights.

There are legal limits on which contracts are enforceable by law, and perhaps mandatory arbitration should be one of them. But there is always, in principle, the ability to waive one’s rights, because there’s no other logical way to voluntarily incur future obligations.


Waiving your rights is about removing future options. Since you're agreeing not to do something. That is not an obligation and the requirement do something. Not the inability to do something. One is an action the other is inaction.

If you say I agree to go to arbitration that is an obligation. If you say I will never sue and must always go to arbitration that is final. That is removing the option to sue and adding in an obligation.


> Waiving your rights is about removing future options. Since you're agreeing not to do something.

Every contract entails waiving your rights and removing future options. And tons of contracts include, as consideration, the agreement not to do something. Leases, for example. If you lease an apartment, you usually have an implied legal right to sublet; correspondingly, most landlords have a clause in the lease requiring you to waive that right, right next to the clauses requiring you not to get a pit bull or smoke cigarettes indoors or have somebody else living with you unbeknownst to the landlord.

Another example is exclusivity agreements: a shopping mall might sign a contract with Panera giving that Panera an exclusive right to sell sandwiches at that mall, which means the mall is agreeing not to lease a different retail space to Subway or Quiznos. What if they lease it to Qdoba and Panera thinks a burrito is a sandwich? That was a real lawsuit, which Panera lost, not on the grounds that it's impossible to incur a negative obligation by contract, but on the grounds that a burrito is not a sandwich: https://loweringthebar.net/2006/11/judge_rules_bur.html

There are legal rights that are protected to the extent that you cannot waive them and that any contract that entails such a waiver is an illegal and unenforceable contract. It's just that these rights tend to be explicitly stated as such in law, and the right to go to a court of law is not currently one of them. Maybe it should be, but that's a policy argument, not a fundamental argument of legal and moral principle the way you're making it out to be.


> There are legal rights that are protected to the extent that you cannot waive them

Yes. This is entirely about "legal rights". Why would you assume otherwise? And the right to go to court, the right for the law of the land to be applied, is a legal right, it may even be a human right. The US is lacking behind the world in legal and human rights, is the entire point of this thread.


> The US is lacking behind the world in legal and human rights, is the entire point of this thread.

That is a ridiculous overgeneralization.


Ok, in the developed world. And it really isn't. The US might be the worlds richest Country but in many areas, it's like a developing nation.


> The US might be the worlds richest Country but in many areas, it's like a developing nation.

Primarily in that it's still developing rather than stagnating.

> Ok, in the developed world. And it really isn't [a ridiculous overgeneralization that "the US is lacking behind the world in legal and human rights"].

Conveniently enough, I already have a list of counterexamples for Europe in particular:

* The United States also recognizes a constitutional right to same-sex marriage, which is not at all recognized in Italy, Greece, Czechia, Poland, Slovakia, Romania, Bulgaria, Lithuania, Latvia, Estonia, Switzerland, and Northern Ireland.

* In terms of civil liberties, the US is virtually unique in recognizing an absolute right against self-incrimination and an exclusionary rule of evidence, where evidence collected in contravention of anyone's civil rights is admissible in court.

* One of the biggest controversies in recent American politics is whether to overturn the constitutional standard of jus soli birthright citizenship--the notion that any human being born on American soil is unconditionally an American citizen. No European country has this policy at all, let alone enshrined in a written constitution.

* The US does not have mandatory military service. However, Austria, Denmark, Finland, Greece, Norway, and Switzerland all do.

* Unlike many European countries, the US has a virtually complete lack of media censorship by the government.

* Austria, France, Belgium, Germany, and Bulgaria have all outlawed face coverings, while Switzerland has banned the construction of minarets. France prohibits the wearing or display of "conspicuous religious symbols" in schools, a law targeted at hijab-wearing Muslims. The United States has no equivalent laws, and any such laws would almost certainly be ruled unconstitutional.

If you're bringing in "the developed world", that might include countries with absolutely terrible human rights records like Qatar or UAE, as well as other undemocratic states like Singapore.


Using your interpretation, the inability to waive a right means nothing.


Not really. If I have a right to sue and I waive that right and I am not longer able to sue then waiving the right means a lot. Since I am not longer able to choose, I no longer have that right.

Also, I am pretty sure these are definitions and not interpretations. (According to the Oxford dictionary)


There are many rights you can't waive. For instance, you can't sell yourself into slavery--everyone except for hardcore libertarians is fine with that one.

And you can't waive your right to remain silent permanently. You can reassert that right at any time.


Unless you plea bargain, or receive judicial immunity.


The right isn't really to "remain silent", it's the right to avoid self incrimination. If you have immunity, you still have that right, you just can't incriminate yourself.


It's absurd that you can actually waive any of your legal rights...

Employment laws in Switzerland allow some contractual issues to be freely set, some can only be changed to the employees advantage and some cannot be changed at all.

For example : Mandatory vacation by law is 4 weeks (20 days). A contract can stipulate 5 weeks vacation, but agreeing on three weeks is illegal.

Despite the fact that UBS is a Swiss bank trying to sneak an arbitration clause into a Swiss employment contract would be laughed out of court.


I think this is solved quite ok where I live. We can not "agree" to anything that gives us less rights than the laws express.

So you can't enter into an agreement where you waiver worker rights, consumer rights (warranty) etc.

Any such agreements are void.


It's only absurd if you waive a right that is beneficial to you. In the EU we have a legal right to work no more than 30-something hours (I don't recall the exact figure).

Now, I'm fine with the idea that no-one should be forced to work excessive hours. So I have no issue with a right of this type existing.

But that's different from me choosing to work particular hours. So, in my case, that right is a restriction to my freedom that has no particular benefit. So I waive it.


You shouldn't be able to waive any right preemptively. If you choose to waive the right to trial for a current case or choose to waive the right to not work over 30 hours for now, that is fine. If you can waive the right to ever go to court or permanently waive the right to not work more than 30 hours, that is a problem.


There's no "ever" here. I choose to waive my right within my existing contract.


> It's absurd that you can actually waive any of your legal rights... Seriously, this is bonkers.

I see this claim all the time in comments about mandatory arbitration clauses, but it doesn’t make sense as stated. You need to narrow it down or at least clarify it somehow.

Being able to waive legal rights is necessary for society to function. For example, I have the legal right to not give McDonald’s $1. I waive that right in exchange for them giving me a soda. I have the legal right not to go to work every day, which I waive in exchange for a paycheck. And so on.


That's a good point. I suppose the goal is that your right to a judicial process must become inalienable, much like your rights to life and freedom that cannot be waived contractually.


> I have the legal right not to go to work every day, which I waive in exchange for a paycheck

No you don't. You chose to go to work every day, in exchange for said paycheck. But it is a choice, and you can reverse it any time. Waiving the right means "in exchange for this paycheck, I promise to waive my right not to go to work for you - i.e. I am now legally your slave". You can't do that.


Arbitration agreements are a massive, massive scam and the fact that they can be forced as part of your employment contract needs to go. It allows companies to sweep away shitty corporate behavior and avoid addressing the actual issues with their workplace in addition to overwhelmingly tilting the system against employees.


My rule of thumb is if I can't opt out of arbitration then I can't work for you. Most established orgs give you a grace period after start date to request opt-out to legal and I've run into no flack for doing just that. However I've learned from experience that it is critical to not be bound by it - especially if your pay is tied to a metric or a quota and/or a portion of your package is options/RSUs.


so... serious question, and I'm asking you, 'cause it sounds like you are implying that you've sued your employer. is suing your employer a seriously career-impairing move? I mean, I think most court proceedings are public records, and it seems like if the fact that you sued your last employer for something came up in your background check, I personally assume that'd be as bad or worse than an old felony conviction, from the employer's perspective.

Are people who sued their employer a protected class in the USA, or is there some other reason why this isn't a career-ending event?


I didn't imply I sued them. Keep in mind that suing someone has the implication of going public. You don't need to sue someone to be bound by arbitration. Generally legal conversations can and will happen prior to the event of suing your employer. This is something most people would gloss over or not consider. If you sign arbitration you have no wiggle room - because it is all up to the company, and they likely view arbitration as in their best interest. But if you have opted out you can go get your own attorney and present your claim without getting into a public legal battle. If you hold the cards it is in their best interest to negotiate, settle and not get sued (as that becomes public and is bad for both sides). Generally when making legal agreements the "career ending events" are protected as part of the settlement. It would be amiss to forget to CYA in your negotiation. This may include language that explicitly states anyone from that company talking about your externally. Obviously they're incented to keep that bargain or you can then go down the path of defamation and further liabilities.


it probably won't impact you.


well, yes. For a lot of reasons, I'm not likely to sue my employer.

But, that doesn't mean I'm not curious.


This is why you unionize.


Seriously. I wonder what alternative solution that union skeptics have to offer for this problem.


Straightforward regulation?? Binding arbitration goes against logic, which is presumably more fundamental than even common law.

In a way, unionization is really just one step up from that "vote with your dollars" tripe, and we know how well that works. I'm not categorically rejecting it, just highlighting that it's more of a stopgap than a solution.

For instance, why wouldn't a union's management adopt the same kind of disenfranchisement clauses in case you try to sue them? You know, to keep dues down and all that.


Why would you regulate something when there is no consequences? American always hold the position of various degrees of "don't trust the government, take care of yourself", but as soon as something gets slightly uncomfortable someone else is supposed to step in.

Unionizing isn't really like voting with your dollars. Individual contract negotiation is essentially that. Unions have actual market power. It is like e.g. Walmart stops selling something.

A union could adopt a similar clause, but the members shouldn't allow that. If they do you of course have a much larger problem.


The consequences of deeply fundamental issues develop slowly. Binding arbitration goes against the concept of law itself - allowing one party to unilaterally effect how a contract document can be interpreted means there is actually no contract at all! Even capital-L Libertarians believe that one of the jobs of government is to administer law, and so preserving that function is directly in line with its purpose.

Of course we can just assume that it's a forgone conclusion that government is corrupt, and look to how we can personally act to overcome - I did say that collective action is a "step up" from individual action. It's just important to remember the larger context of direct action being a tactic rather than a solution.


They'll tell you that nobody's forcing you to work for a company that requires you to undergo forced arbitration.

I tell them that nobody's forcing them to work for a union shop.


Yes, I'm certainly not against a union-optional situation. If specific companies want to be union-only, that's fine by me. I'll go work elsewhere. If those companies can change their minds and admit scabs, that's okay by me.

If a bunch of people want to group together to bargain, that's their right. I've gotten together with my co-workers and spoken to bosses before. The only problem is when state regulation is used to enforce this. I'm not okay with that.


It can't be a right if it isn't regulated. Unionizing is a legally recognized international right. It isn't really optional. Then of course you can argue how it should work, but that is largely a different matter. You want to waive that right that's fine, but it is just that. Anyone else who wants to keep their right should get to.


I get what you mean but the "nobody's forcing you" arguments are all fallacious. Life it's not a dichotomy between forced and free.


It's really sad corporate America owns workers, forced arbitration is such a handout. Now UBS gets to ax anybody they want a day before their bonuses are due and even if they go through with arbitration they've done the math and saved 50%.


Just to put a word in for the other side. A friend of mine had some startup that had a huge contract for its product. One of the employees got let go and filed an employment suit. The lawyer he got was somewhat unethical and basically buried the company in legal fees. They went out of business before they could fulfill the big contract and tried to settle many times with the employee, but the lawyer kept egging him on and nobody got any money in the end except the lawyer. The end.


Burying the opposition in legal fees is only available to parties with the financial resources to keep their lawyers going. The vast majority of the time, it is companies employing this stratagem, not individuals.


It's different when it's a bootstrapped startup though.


so, because in this one time the company was as vulnerable as the person, the law is.... what? I can't even guess where you were going with your point!


I'm guessing that it was: Corporations are people too? Otherwise, likewise, I can't fathom what the point of the anecdote was.

If the company was truly in the wrong, then it going out of business isn't - necessarily - a bad thing. It sucks for the employed by it, yes, but - in the overall scheme - perhaps it was for the best?

Either way, there's - clearly - not enough information for this to be worthwhile.


We should fix the legal system to be more effective and more fair. Forced arbitration doesn't do that--it just makes it (more) unfair in different ways.


How can the lawyer of one party cause legal fees to the other party?

I genuinely do not understand, as each party is responsible for its own costs


Each time you file a motion or a brief, the other side has to review that brief and file a counter-motion or brief. And research has to go into those things and you might spend days trying to come up with the information being requested.

Every request you make from the other side, causes the other side more work and thus more expense.

Imagine I asked you to find a receipt for every restaurant you've eaten at in the last year, along with a list of who was there and what was discussed. How much work is that for you? Would answering that question be a significant amount of work?


>Each time you file a motion or a brief...

That doesn't sound like arbitration.


It sounds like the OP got a second-hand storytelling of what happened, and the original storyteller didn't know the exact details or made things up. It doesn't make sense for the lawyer to not to suggest settling especially if the company is going to go under.


If I'm suing you and I file a motion for summary judgement in my favor, do you need to respond to it? How much is your attorney going to be charging for the time required for that response?

Now imagine that I'm filing multiple motions per week some of which may require a fair amount of time to respond to, so you're getting billed for 10-40 hours of attorney time per week. How long can you sustain that burn rate?

This ties into SLAPP (Strategic Lawsuit Against Public Participation, aka "I may not be able to win my suit, but I can make you spend hundreds of thousands of dollars to defend against it anyway") and the saying "You can beat the rap, but you can't beat the ride" ("we may not be able to convict you, but we can drag a court case out for years and ruin your life").


I didn't know that it is legal to force someone to resign from being able to go to the court. I thought that right to use court to defend ones right is a right that cannot be revoked by some agreement. For me it looks as if someone would sign an agreement that company might kill employee if sales target is not met or enslave him and his family.


I'm fairly against arbitration and I'm fairly certain it's much more limited here in Canada.

In this particular story, what strikes me is the amounts being discussed. 1 million dollars isn't chump change to anyone. If we have to have arbitration, there should be a hard legal limit on how much they can arbitrate when a physical person is involved. Also it should be limited to financial matters, forcing any other matter (discrimination etc) to be settled privately seems... wrong.


>In this particular story, what strikes me is the amounts being discussed. 1 million dollars isn't chump change to anyone. If we have to have arbitration, there should be a hard legal limit on how much they can arbitrate when a physical person is involved.

Two points:

1. 1 Million is chump change to UBS.

2. It was class-action. More parties = More money. He wasn't in it just for himself.


Arbitration contracts need to be illegal, period.


I think they should be legal but both parties need to agree to it after a lawsuit is filed. The courts may approve or deny this request on the basis of public policy.

I wonder if a political party (Democrats) will take it up on them to restrict the ability of forced arbitrations between an employer and employee. I think it is just a question of time before someone like @AOC starts talking about it.


The CFPB tried to make a rule preventing forced arbitration in financial services agreements. You will be unsurprised to hear that Republicans in Congress struck that rule down.


Arbitration is perfectly reasonable. I can imagine in the old days (even now in some regions) the elders would gather to settle /judge disputes so they'd be no fights, killings and so on.

But today, the fact that companies, with a lot more lawyer money than individual employees, push that, shows all we need to know.


While we are all bemoaning this for employment, note that in the US, in many cases, you've also given up your right to court for your credit card disagreements, disagreements with your insurance company, and disagreements with most major service providers where you had to sign a contract (though many telcos still provide an out for Small Claims court).

This is not just an employment thing, this is individual vs. group power dynamics across many aspects of commerce. As consumers or creators, if we provide work to a group (employment) or pay a group for service (a contract), that group is often working to push us into arbitration instead of allowing the courts to decide.

It's all very disappointing.


With arbitration, for the company, worst case the company pays the original amount. Without arbitration, in the court, worst case is the company pays the original amount + the clients lawyer fees.


What would happen if you hired a lawyer and sued anyway? People agree to things all the time that wouldn't hold up in court.


The other party would then file Motion to Compel Arbitration. This will usually result in the dismissal of the lawsuit.


You maybe missed the point where the Supreme Court ruled that binding arbitration clauses are enforceable.


But arbitration does, that's the problem.


You'd pretty much be spending money with no hope of even getting your issues discussed. And possibly having to pay the legal fees of your boss for the hassle.


I have very little sympathy and connection with people who forfeit a 500k bonus to fight for a million instead, knowing they gonna have a hard time doing so.

They should have portrayed someone from the nurses they mentioned instead. Small amounts or problems someones life depends on make for a dramatic story, a rich guy and his fight for hundred thousands of extra compensation make me scoff.


If they do it to a rich person what do you think happens to the average worker. ie me and you

You cant in any sane country have a legal system that has one rule for "cute" nurses or any other group that the tabloids moon over and one for the average person.


"(the) firm Proskauer Rose LLP who specializes in defending finance companies" — I wonder what would happen if _their_own_ employees sue them, it would be hilarious.

Also:

Apparently, I can't select the text to copy/paste—and I've tried disabling JavaScript. I wonder what's the reason for this?


There exists a CSS property to disable highlighting, user-select: none; I believe, but in this case ( with JS enabled ) the highlight colour is simply not WCAG AA2 compliant and is nearly the same colour as the background

See the paragraph starting "After Chinn's rebuttal..." - https://i.imgur.com/M02ob3O.png


I can select fine even with javascript enabled -- the issue seems to be that the highlight is nearly invisible.


Why can’t judicial systems just get more funding? Surely they aren’t that expensive? You just have to rent the space, and pay the employees (all of which probably don’t make that much money).

Surely some money from the military could pay for that?


> pay the employees (all of which probably don’t make that much money).

Court are packed with lawyers. The only thing buttressing against the sky-high compensation a good lawyer can make in the private sector is the political opportunity clerking and working in a court can open up. These aren't people one goes cheap on.


According to google, public prosecutors make a median salary of $81,000. So maybe like two-thirds as much as an average software engineer? Doesn't sound that expensive.

Also, they get to cash in after working in the public sector for awhile, so in essence they get deferred comp from the private sector.


You collect more fees with the more hearings you host. It would be trivial to increase the size of the justice system. However, the system as it stands now is ideal for huge trillion dollar companies.


Can a lawyer here explain how these arbitration clauses aren't unconscionable?


Not a lawyer, but the Supreme Court has ruled that they are Constitutional, and that’s pretty much that.


That doesn't mean it's automatically how things should be. The Supreme Court doesn't rule on that. If the Supreme Court was the only measure of "correctness", then the US might as well wipe its statute book clean.

Another way of looking at it is that the Supreme Court has only ruled that they aren't _un_constitutional. It's then up to Congress to decide whether or not they should be illegal.

I read elsewhere on this page that apparently the Republicans blocked such things from becoming illegal.

In my view as a non-American, it feels like Americans attribute too much weight on things they don't like on the Supreme Court, which deflects from the reality that it is the major political parties (perhaps just one) supporting this status quo.


The Supreme Court isn't an unquestionable authority on what is right. They are our pragmatic system of determining what our laws (including the constitution) actually mean in a given context. Sometimes they do great at that. Sometimes they do terribly. We don't all agree on which is which! Even when they rule on something (rightly or wrongly), the law can be changed afterward to undo the effects of their ruling (even the constitution). In this case, many (including me) would argue that that was a terrible ruling and that laws should be passed to clarify that you can't sign away your right to a trial preemptively.


They ruled that they are "constitutional" not that they are "conscionable".


With arbitration, for the company, worst case the company pays the original amount. In the court, worst case is the company pays the original amount + the clients lawyer fees.


Not sure why people sign contracts like that; never sign non competes or this kind of thing. Never did never will. But then again, I am not in the US, maybe it is that different.


Five top-to-bottom scrolls on my mouse just to get to the first line of the article.


Physical access: game over


Arbitration isn’t necessarily bad for workers. Arbitrators tend to split the baby. So, if you have a weak case, you may come out ahead.


Employees only win some 20% of arbitration cases. It seems incredibly unlikely that 80% of cases are employees going through all this outlandish effort just for bogus claims.

And if 20% is considered splitting the baby, I tremble to imagine what part the employee ends up with.



1. That is only "civil rights lawsuits", probably one of the hardest kinds of cases to win.

2. You left out the 78% "likely settlement" category. Many of those are victories for the employee, just not the maximum possible victory.




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