We told you last year about a disappointing federal appeals court decision that ended an attempt by the California Assembly to ban “forced arbitration” clauses. Workers who sign these clauses can’t take their employer to court to seek remedies and compensation for violations of the law. Under forced arbitration, the employees’ only recourse is a secret proceeding often tilted in favor of the employer.

It gets even worse. If your employer required you to sign a mandatory arbitration agreement as a condition of your employment, or as a condition to receive severance pay if you were laid off, here are some disturbing trends to be aware of.

In a report titled “The New Forced Arbitration Even Worse Than The Old Forced Arbitration,” the American Association for Justice highlights five tactics used by corporations that increase their already strong odds of winning an arbitration case. One deals with tactics used against consumers, forcing them into arbitration without an agreement, but the rest are relevant for workers who might face a forced arbitration:

• Companies can add pre-dispute hurdles before an arbitration can be filed
• They can refuse to pay fees, effectively blocking the start of arbitration
• They can change the rules in the middle of a dispute
• They can group arbitration claims together and dismiss them as a block

A CNBC article shows how X, the social media company formerly known as Twitter, was accused by former employees of refusing to pay arbitration fees after Elon Musk took over the company and Twitter laid off hundreds of employees. In one district court filing, a former senior staff network engineer, alleges that Twitter didn’t pay him severance and then delayed his arbitration by refusing to pay the fees.

Another similar case was filed as a class action, alleging Twitter delayed close to 900 arbitration cases by not paying filing fees after making laid off employees agree to mandatory arbitration as a requirement of receiving their severance packages.

Lower-wage workers are hurt disproportionately by forced arbitration. The National Employment Law Center found in 2019 that U.S. workers earning less than $13 an hour who were subject to employee-imposed forced arbitration were owed $9.27 billion in unpaid wages. Aspects of employment law covered by arbitration include minimum wage, off-the-clock duties, and overtime. Those workers often have a difficult time finding lawyers willing to take cases that must be arbitrated because of concerns the system favors employers.

Despite forced arbitration clamping down on workers’ rights, some recent developments have benefited employees.

In 2022, an amendment to the Federal Arbitration Act became law that excludes allegations of sexual assault or harassment from forced arbitration agreements. Under the Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act of 2021, victims can refuse arbitration and can pursue their claims in court so that companies can’t hide alleged misconduct in private proceedings.

And in 2023, the Federal Trade Commission proposed a new rule that would prohibit employers from imposing noncompete clauses on workers, which would give them options to take jobs with better pay and working conditions, potentially raising wages.

These clauses are already unenforceable in California as well as in two other states, North Dakota and Oklahoma. It’s also against California public policy to fire an employee for refusing to sign an agreement containing a void noncompete provision, and doing so exposes an employer to wrongful termination liability. Moreover, the California Court of Appeal has extended that prohibition to employers that fire or refuse to hire someone because that person has signed an illegal noncompete agreement with another company.

Is your employer violating the law or you suspect they are not playing by the rules? Contact Keller Grover today for a free consultation. With more than 30 years litigating fraud and employment cases, Keller Grover has recovered billions for clients.