September 30, 2019
Bill would ban forced arbitration clauses in consumer and worker contracts
Media contact: National Consumers League – Carol McKay, firstname.lastname@example.org, (412) 945-3242 or Taun Sterling, email@example.com, (202) 207-2832
Washington, DC—The National Consumers League is applauding the groundbreaking legislation passed in the U.S. House of Representatives to restore legal rights to millions of American workers and consumers.
By a vote of 225-186 September 27, the House adopted the Forced Arbitration Injustice Repeal (FAIR) Act, banning companies from forcing workers and consumers to resolve legal disputes in private arbitration—a forum essentially controlled by the company with no judge, no jury, and no oversight.
These clauses have become ubiquitous in employment and consumer contracts, “take or leave it” contracts of adhesion that make it impossible for workers to sue their bosses in court for sexual harassment, racial discrimination, wage theft, and nearly anything else or consumers to sue when a product proves dangerous, falsely advertised or marketed or violation of privacy or other rights. Arbitration is a rigged system where workers and consumers are less likely to win their cases in private arbitration, and when they do win, they tend to get much less money than they would in court.
Outlawing forced arbitration would restore access to the courts to more than 60 million U.S. workers who have signed away their right to sue.
“Arbitration is one of the central ways in which corporate America has rigged the system against middle class families, working people,” Rep. Rosa DeLauro (D-CT) said Friday on the House floor.
The bill will likely face some resistance from Republicans in the Senate, but passing it in the House is a victory for workers and consumers. “It’s about time our House of Representatives stood up for democracy and the little guy,” said Sally Greenberg, NCL executive director. “We thank Majority Leader Nancy Pelosi and members of the House Judiciary Committee for their leadership to move this bill and restore consumer and worker rights and hold corporate wrongdoers accountable.”
As Greenberg noted, “Forced arbitration clauses are toxic for companies and employees; they embolden companies to break the law with impunity, knowing they will never be held accountable because they cannot be sued in most democratic institution in the American democracy -our courts. Passage of the FAIR Act is an essential step to this end run around protecting the rights o average Americans.”
Forced Arbitration Injustice Repeal Act, briefly explained (Source: Vox)
The FAIR Act, introduced by Rep. Hank Johnson (D-GA) and Sen. Richard Blumenthal (D-CT), would ban businesses from forcing workers and consumers to give up rights through mandatory arbitration clauses. It would also invalidate current agreements that have already been signed, but only for disputes that come up after the law goes into effect.
The same bill was before the House last year, but did not get support from Republicans, who controlled the chamber at that time. This time around, the challenge will be to get it through the Senate. But Republican senators, including Lindsey Graham (R-SC), have recently shown an interest in curbing forced arbitration.
NCL applauds the House of Representatives for this historic vote and for its support for consumer and worker rights. We urge the Senate to move with dispatch, pass the bill and send it to the President’s desk for signature and enactment.
About the National Consumers League
The National Consumers League, founded in 1899, is America's pioneer consumer organization. Our mission is to protect and promote social and economic justice for consumers and workers in the United States and abroad. For more information, visit www.nclnet.org.