What Obama Did: How Our President is Helping Fight Back Against Forced Arbitration

September 15, 2014  |  Employment Law, Overtime Violations

Say what you will about President Obama, but one thing is for sure: He is doing work that is desperately needed to help our contractors and laborers, people who are all too often taken advantage of by the powerful corporations who hire them for “contract” work.

I previously wrote about Obama’s initiative to fight employers’ abuse of overtime. This was an important step in holding employers accountable for the hours that they employ their employees — meaning, the practice of denying payment for overtime work or slicing off hours worked to keep the costs low for the employer.

And now, on the last day of July, Obama signed an executive order, titled Fair Pay and Safe Workplaces, that is one of the most profound orders to date to protect federal contractors.

The Fair Pay and Safe Workplaces order is a profound piece of legislation, one that will undoubtedly help countless employees and misclassified independent contractors around the country.

I work to help individuals who work over 40 hours per week without being paid the federally mandated overtime pay for all overtime hours worked Over the many years of my overtime wage legal practice, I have learned that this is a bigger deal than most people might think and I invite you to read more about it here.

Similar to forcing employees to work overtime without paying them proper overtime, “forced arbitration” is a tactic Big Businesses use that is just as common as it is ethically questionable. Forced arbitration is a type of supposed substitute for the courtroom where the employer attempts to take away the employee’s Constitutional right to a jury trial in place of a system that is typically gamed to tilt the scales of justice in favor of the employer. Instead of a neutral judge and jury considering the employee’s claim, an arbitrator whose salary is typically paid by the employer decides the employee’s case. It should be no surprise to anyone that such a setting creates a very real likelihood that the employee and employer are not fighting on a level playing field. Furthermore, forced arbitration clauses typically seek to waive many of the employee’s legal rights, such as the right to participate in a class action or the right to punitive damages, legal fees and costs in certain cases. Most importantly from the viewpoint of many employers, eliminating the potential for a class action enables them to persist in their potentially illegal conduct since there is no class-wide remedy to stop it. So, this leads me to Fair Pay and Safe Workplaces, an executive order that addresses the practice of forcing arbitration on employees of federal contractors. With the order, companies with federal contracts worth more than $1 million (i.e., Big Businesses) must stop forcing their employees into arbitration to settle accusations of all forms of workplace discrimination.

That means thousands of employees who had lost their right to address their grievances with their employer before a fair and neutral judge and jury now have access to the justice system again. And thanks to the restoration of their right, Big Businesses, too, many finally learn this important lesson: In the United States, you cannot deny your employees the wages they have earned. It’s not just the wrong thing to do; it’s also a violation of law. With this executive order, at least employees of defense contractors will once again have access to our Constitutionally protected right to a fair trial. However, this same standard of access to a fair trial should be guaranteed for all employees, and not just limited to employees of defense contractors.

There is still much more work to do but this order was not just a little step, it was a big step in the right direction and for that everyone here at Baron and Budd say Congratulations, Thank You and let’s keep going.

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