New Legislation Bans Arbitration In Federal Defense Contracts

As Congress ended its last session, a legislative victory for employee rights advocates came with it.

The bill, signed by President Obama at the end of December,  came about because of the horrible story involving Jamie Leigh Jones. Here's one description of what happened as reported in September by  Think Progress:

In 2005, Jamie Leigh Jones was gang-raped by her co-workers while she was working for Halliburton/KBR in Baghdad. In an apparent attempt to cover up the incident, the company then put her in a shipping container for at least 24 hours without food, water, or a bed, and “warned her that if she left Iraq for medical treatment, she’d be out of a job.”

Even more insultingly, the DOJ resisted bringing any criminal charges in the matter. KBR argued that Jones’ employment contract warranted her claims being heard in private arbitration — without jury, judge, public record, or transcript of the proceedings. After 15 months in arbitration, Jones and her lawyers went to court to fight the KBR claims. Yesterday, a court ruled in favor of Jones.

The tragedy spurred the bill which became known as both  the "Franken Amendment" and the"Jamie Leigh Jones Amendment" (to the Defense Appropriations Act for 2010) . It's the first federal legislation that prevents employees from forcing binding arbitration on their employees as a forum for resolving employment disputes.

In recent years, many companies have required employees to sign contracts, handbooks, and other documents which require them to go to arbitration to resolve their employment disputes.

When employees sign -- which they are forced to do to either get the job or keep the job -- they give up their right to take claims against their employers to court. Cases involving discrimination and sexual harassment, to name a few, are compelled to go to arbitration instead.

An arbitration is generally held before three arbitrators and is commonly  viewed as a favorable forum for employers versus employees.

Without binding arbitration, employees have the right to take their discrimination cases to court, and with sufficient evidence, in front of a jury. It is this precious right to a jury trial which is at the heart of this issue.

The Franken Amendment prohibits the award of Department of Defense contracts of over one million dollars to any company that forces its employees or independent contractors to submit to pre-dispute binding arbitration of Title VII and sexual assault-related tort claims

Under the bill, defense contractors:

  • with over $1 million (which is most) that are funded by 2010 appropriations will not be able to force arbitration of Title VII and sexual assault-related tort claims
  • will not be able to enter into forced arbitration agreements with their employees or independent contractors or enforce any agreements that have such provisions.

The list of covered sexual assault-related tort claims covers:

any tort related to or arising out of sexual assault or harassment, including assault and battery, intentional infliction of emotional distress, false imprisonment, or negligent hiring, supervision, or retention

The Franken Amendment will protect hundreds of thousands of employees around the country from being forced to arbitrate their Title VII claims. It also provides persuasive authority for employee advocates to strike down forced arbitration clauses in other federal contracts.

It's also a step forward to getting rid of forced arbitration in other employment settings.

All in all, it's a great victory on a critical issue for employee advocates and we thank Senator Franken for his efforts on behalf of employee rights.


It's Not All Bad News in Battle Against Mandatory Arbitration

The recent US Supreme Court decision in the14 Penn Plaza v. Pyett case was a huge blow to employee rights. The case held that a worker can't go to court on a discrimination case when the union bargaining contract  requires that  civil rights claims must go to arbitration instead of a judge or jury.  There's are lots of summaries of the case including those in  Ross Runkel's Law Memo  the SCOTUS BLOG and The Wall Street Journal.

The 14 Penn Plaza case is another chapter in the ongoing battle regarding mandatory arbitration of civil rights and employment claims and the decision couldn't be worse.

The only bright spot on the topic is that there was a very good decision from the Third Circuit  Court of Appeals just days before 14 Penn Plaza in the case of Kirleis V. Dickie, McCamey & Chlcote, P.C.

In Kirleis, the Court  held that the plaintiff was not required to arbitrate her civil rights claims. Here's what happened in the case.

The plaintiff, Alyson Kirleis, practiced law with the firm of Dickie, McCamey & Chilcote. She worked there since 1987. She became a shareholder in 1998.

Kirleis filed complaints against the firm alleging sex discrimination, retaliation, and hostile work environment in violation of state and federal law. The firm filed a motion to compel arbitration  based on a provision of its bylaws which mandated arbitration of any disputes.

Kirleis submitted undisputed evidence stating that:

  •  she never got a copy of the by-laws
  •  she never saw the document which contained the mandatory arbitration language
  • she was never given a copy of the document which contained the mandatory arbitration language
  • she never signed any agreement to arbitrate
  • she never agreed to arbitrate her claims against the firm 

Therefore, she argued, that since she never agreed to the arbitration provision she could not be bound by it.

Continue Reading...