Contractual Injustice

Signing Away Your Rights: Forced Arbitration—Overcoming Corporate “Get Out Jail Free Cards” and Finding Avenues for Justice

Forced Arbitration has taken away peoples’ day in court. Finally, plaintiffs are fighting back.

Amy Hayes

September 11, 2022

“I reported racial discrimination within my employer . . . . and within three months I was fired,” Glenda Perez tells the American Association for Justice. Racial discrimination and retaliation for reporting bad behavior are both illegal under U.S. law. Normally, such discrimination and retaliation would result in a court case, where Perez would be able to sue her employer for damages under Title VII. Unfortunately, Perez’s employment contract had a “forced arbitration” clause. 

Arbitration is a type of out-of-court mediation to settle disputes. Like court, arbitration can involve lawyers and a third party, an arbitrator or mediator, who works to settle the dispute. Unlike court, arbitration does not have constitutional protections and is conducted in private. These legally binding, secret proceedings are conducted by for-profit providers, such as Judicial Arbitration and Mediation Services (JAMS) and The American Arbitration Association (AAA), which have no connection to the courts.

The Constitution guarantees certain rights within a court of law. Specifically, the Seventh Amendment grants every person the right to a jury. However, when parties agree to “mandatory binding arbitration,” or “forced arbitration,” these Constitutional protections are removed. And once a person has signed an arbitration clause, it can be nearly impossible to bring cases, no matter how egregious the conduct, to court.