Arbitrating Disputes

March 11, 2016 • Volume 26, Issue 11
Should consumers and workers have the right to sue?
By Kenneth Jost

Introduction

When J. Tadeo Gamez Flores signed an employment contract for a janitorial job (Getty Images/Los Angeles Times/Mark Boster)
When J. Tadeo Gamez Flores signed an employment contract for a janitorial job, he says he did not realize that it prevented him from suing his employer in court over wage disputes. Instead, he was required to use arbitration to try to recover wages he now says he is owed. (Getty Images/Los Angeles Times/Mark Boster)

Companies increasingly are including clauses in contracts with customers and employees that require any disputes to be resolved through arbitration instead of in court. Some of these clauses require disputes to be resolved in individual instead of class actions. Companies say arbitration is quicker and less expensive than litigation not only for businesses but also for customers and employees. But consumer and employee advocacy groups argue that arbitration is tilted in favor of business interests and ends up shielding companies from legal accountability for wrongdoing. A federal law enacted in 1925 helped pave the way for arbitration to become widespread in the United States by providing that agreements to arbitrate disputes were enforceable in court. Since the 1980s, the Supreme Court has issued a series of divided and controversial opinions expanding the scope of the law. Meanwhile, Congress has exempted some groups, such as car dealers and poultry producers, from mandatory arbitration clauses, but it has not acted on broader proposals to limit arbitration for consumers and workers.

ISSUE TRACKER for Related Reports
Consumer Protection
Mar. 11, 2016  Arbitrating Disputes
Nov. 11, 2011  Google's Dominance
Jan. 23, 2009  Regulating Toxic Chemicals
Dec. 19, 2008  Limiting Lawsuits
Oct. 12, 2007  Consumer Safety
Feb. 17, 1978  Consumer Protection: Gains and Setbacks
Nov. 15, 1972  Toy Safety
Mar. 03, 1960  Consumer Protection
BROWSE RELATED TOPICS:
Consumer Protection and Product Liability
Federal Courts
Legal Professions and Resources
Supreme Court History and Decisions