Congressional Democrats Demand Forced Arbitration Overhaul

April 15, 2016  |  Other

On April 14, a group of Democratic congressional representatives took the rather unusual step of calling on the House to overhaul the practice of forced arbitration, a method of resolving private disputes outside of the court system. Even though this process may seem fair on the surface, in the vast majority of instances it is biased toward the corporations that often put them in their employment and service contracts.

An Overdue Call

The New York Times reported the representatives are calling for strong limits placed on the practice of mandatory arbitration, in which arbiters, not judges or juries, decide on a wide range of private disputes.

If you have ever purchased a cell phone, applied for a credit card or performed one of hundreds of other types of transactions, the odds are very good that you have agreed to a forced arbitration clause. Buried deep within the fine print of most service contracts you will find these clauses that basically take away your rights to have disputes heard in a court of law.

According to the article, the representatives say they want an overhaul of this system because the process is too heavily weighted toward the company providing the service. Typically, an arbiter who hears this type of case is hired by the very corporation involved in the dispute. As a result, he or she will decide in favor of that corporation most of the time.

Even More Serious Consequences

But these forced arbitration clauses can cover much more than consumer products. Many companies include them in employee contracts, and they are even commonly found in nursing home contracts. As a result, people who believe they have been wrongly fired cannot file a lawsuit, nor can people who believe their loved ones have been abused in certain nursing facilities.

In addition to the congressional push, efforts are underway in other areas to try and change the forced arbitration system. The Times reported that the attorneys general in the District of Columbia and 16 states are asking the federal government to deny funds to nursing facilities that insist on inserting forced arbitration clauses in their contracts. The Department of Education, according to the article, is considering doing the same to private schools that use the clauses in enrollment contracts.

The Times also reported that Democratic congressman John Conyers Jr. of Michigan issued a statement on April 14 stating Congress should support a bill known as the Arbitration Fairness Act, which would provide consumers with the option of either having their dispute heard by an arbitrator or going to court.

Baron & Budd may be able to help if you are dealing with a matter involving forced arbitration. To learn more, please call 866-723-1890 or complete our contact form.

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