U.S. House passes Rep. Johnson’s bill to ban forced arbitration

By: - September 23, 2019 8:59 am

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WASHINGTON — The U.S. House on Friday passed a Georgia Democrat’s legislation that would eliminate forced arbitration clauses in employment, consumer and civil rights cases.

If enacted, the bill would empower more workers and consumers to challenge employers and corporations in court. Forced arbitration clauses — often found in the fine print of agreements — can bar employees and consumers from suing or participating in class action lawsuits. 

Critics of forced arbitration clauses say the process deprives employees from suing employers over issues like discrimination, harassment or abuse. The agreements bar consumers from suing over scams or faulty products. Meanwhile, complaints are hashed out behind closed doors and the results aren’t made public. 

“Using forced arbitration, corporations force victims into secret proceedings where the deck is stacked against them,” Rep. Hank Johnson (D-Ga.), the lead sponsor of the bill, said Friday on the House floor. “Predictably, the end result is the corporation wins and the victim is deprived of justice.”

He pointed to a woman in Georgia who worked for five years at Kay Jewelers before she learned she was making less than “her more recently hired, less experienced male colleagues.” But “because of her forced arbitration clause she was tricked into signing, she couldn’t get the back pay she deserved,” Johnson said. 

The bill, titled the Forced Arbitration Injustice Repeal Act, passed the House by a vote of 225-186, largely along partisan lines. Two Republicans voted for the bill; two Democrats opposed it. 

Georgia’s delegation broke along party lines, with all nine Republicans voting against the bill, and all five Democrats voting for it. 

Florida Republican Matt Gaetz — an ally of President Trump and one of the two House Republicans to vote for the bill — praised the legislation earlier this month in the House Judiciary Committee. 

“I’m convinced that big businesses’ over-utilization of mandatory arbitration clauses impairs people’s access to something that is fundamentally American, and that is having a judge and jury make a decision regarding your dispute,” he said. 

The legislation isn’t likely to advance beyond the House this Congress. The Senate version of the bill has no Republican co-sponsors, and it garnered a veto threat from the White House. 

“This bill would prohibit private businesses from entering into predispute arbitration agreements, including those allowing for the use of collective arbitration procedures,” the White House said in a statement. “These blanket prohibitions will increase litigation, costs, and inefficiency, including by exposing the vast majority of businesses to even more unnecessary litigation.”

Rep. Doug Collins of Georgia, the top Republican on the House Judiciary Committee, slammed the legislation on the House floor, calling it “simply a political statement” that has no chance at being enacted. He warned it would shut Americans out of the justice system by denying them guaranteed arbitration. “What that would do is not end injustice, but it would actually promote it,” he said. 

Still, bill’s supporters hailed its House passage as a victory for Americans, and they’ve vowed to continue to press the issue. 

“Victims of forced arbitration have spoken, we’re listening!” Johnson wrote on Twitter after the House passage. 

About 60 million U.S. workers are subject to mandatory employment arbitration procedures, according to a 2017 report from the Economic Policy Institute. That number has increased dramatically in recent decades, the study showed. 

Georgia Democrats warned that forced arbitration has wide-ranging societal impacts. 

Because the outcomes of disputes are secret, Johnson said, the public will never know “which corporation tolerates a climate and a culture of sexual harassment of its employees or which corporation fraudulently overcharges its customers, or which nursing home has the sordid history of mistreating its patients.” 

Rep. Lucy McBath (D-Ga.) said mandatory arbitration agreements can hurt small businesses, too. “These tiny clauses hidden in the fine print are used to trick rising entrepreneurs in their dealings with sophisticated conglomerates,” she said. 

“Too often lurking in the fine print, a few words can cost them their constitutional right to their day in court.” 

Johnson has introduced a version of the legislation every year since he first took office in 2007.

“Jury trials are a hallmark of democracy,” he told the Georgia Recorder in an interview. “Somehow the intent of the framers of the constitution has been warped over the years.” 

Johnson lauded Sen. Richard Blumenthal (D-Conn.) — the lead co-sponsor of the Senate version of the bill — for generating support for the effort in that chamber. But Johnson acknowledged that the bill’s fate there is less certain. 

“We of course don’t have a majority in the Senate and we look to get to that point there,” he said. 

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Robin Bravender
Robin Bravender

Robin Bravender is the D.C. Bureau Chief for States Newsroom, a network of nonprofit news publications, including the Georgia Recorder. Previously, Robin was a reporter for Politico, E&E News and Thomson Reuters.