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November 13, 2019

ATTORNEY GENERAL RAOUL REQUESTS INFORMATION ABOUT ARBITRATION PROCESSES TO HELP WORKERS RESOLVE EMPLOYMENT DISPUTES FAIRLY AND QUICKLY

Raoul, 11 AGs Request Data to Address Worker Concerns About Arbitration Proceedings

Chicago — Attorney General Kwame Raoul today joined a group of 12 state attorneys general calling on the nation’s leading arbitration firms to provide information about obstacles workers face in resolving employment-related disputes. Mandatory arbitration clauses in employment contracts require work-related claims like wage-and-hour issues or disputes over workplace conditions to be resolved by privately-appointed individuals called arbitrators, rather than through the traditional court system. The attorneys general are concerned about the extent to which obstacles in the arbitration process, like prohibitive filing fees and stalled arbitration proceedings, may prevent workers from quickly and fairly resolving workplace disputes.

In the letters sent to the American Arbitration Association (AAA) and Judicial Arbitration and Mediation Services (JAMS), the attorneys general highlight problems workers encounter during arbitration, including high costs and delayed arbitration proceedings. Raoul and the coalition are requesting documents and data to better understand the cause and scope of the issues and plan to work with these entities to ensure the arbitration process is as fair as possible to workers.

“Workers should not face unnecessary hurdles in resolving disputes with their employers,” Raoul said. “Having access to more information about these obstacles will help ensure that workers are able to arbitrate employment-related claims in an impartial and timely manner and will promote enforcement of laws protecting workers’ economic security and safety.”

During arbitration proceedings, arbitrators hear from both parties, review the evidence, and make a ruling, though they are not subject to the rules that govern court proceedings. Many employment contracts include these mandatory arbitration clauses, especially for low-wage workers. In fact, one survey conducted in 2017 found that 53 percent of non-union, private-sector employers had adopted mandatory arbitration procedures.

The attorneys general are asking for information and documents about existing arbitration policies and data on suspended or terminated claims. Specifically, Raoul and the coalition seek to better understand complaints they have received from workers, which include:

  • Stalled arbitration proceedings if the employer does not pay the arbitration filing fee: In order for arbitration to begin, AAA and JAMS require both the employee and the employer to pay a filing fee. If the employee pays the filing fee and the employer does not, arbitration does not begin, and there is no clear recourse for the employee to compel the process to proceed, other than costly legal action. The coalition is concerned that this leaves the employee - who is forced to use arbitration - unable to resolve their claims.
  • Higher arbitration costs for employees if they are classified as independent contractors: When an employer classifies a worker as an “independent contractor” rather than an “employee,” workers can face significantly higher filing fees where arbitrators view the claim as a business-to-business commercial dispute - rather than an employment dispute between employer and employee. This distinction is important, as AAA and JAMS set significantly higher filing fees for commercial disputes relative to employment disputes. However, workers classified as independent contractors routinely bring employment-related claims, including those involving wage-and-hour, workplace conditions, or challenges to their employment classification. The coalition is thus concerned that treating these claims as commercial disputes imposes costs that discourage workers classified as independent contractors from proceeding in arbitration.

Attorney General Raoul is committed to protecting workers from unlawful and unfair employment practices. This spring, Raoul testified before the Congressional House Appropriations Labor, Health and Human Services, and Education Subcommittee about the wage theft crisis and the importance of states being able to partner with the federal government in enforcement efforts, and he has consistently opposed the Department of Labor’s proposals that would undermine important employee protections. For example, Raoul opposed a federal proposal to narrow the interpretation of joint employment and has urged the federal government to crack down on non-compete and no-poach contract agreements. In March, the Attorney General’s office announced a settlement with four fast food restaurants to end the use of the agreements, which limit fast food workers’ abilities to change jobs. In addition, Raoul initiated legislation signed into law over the summer to establish a Worker Protection Unit within the Attorney General’s office.

Joining Raoul in sending the letters are attorneys general from California, Colorado, Maryland, Massachusetts, Minnesota, New Jersey, New York, Pennsylvania, Vermont, Washington and the District of Columbia.

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