You probably don’t know you’re signing away the right to sue your employer. It could be illegal soon

For me, the answer is negative to both. Every time I bump into a terms and conditions pop-up, I immediately check “I agree” and go through a bunch of pictures of bikes to prove that I’m not a robot.

According to a 2017 Deloitte survey, I’m not alone. Only 9% of the 2,000 surveyed said they read the fine print before agreeing to it. But buried in the 0.6 size font legalese is an important right that we’re all likely signing away. And it’s probably a right you’ve never heard of.

Many companies have arbitration clauses tucked away like this and they typically bar the employee from taking a case to a public court. This type of mediation, known as forced arbitration, is becoming more commonplace. Between 2018 and 2020, the number of forced arbitration cases between employees and employers went up by 66%. 

As forced arbitration has expanded to reach all sectors, it has become more of a hot-button issue for politicians. Workers’ rights groups tend to claim that forced arbitration is skewed in employers’ favor because the company can often choose the mediator and keep the process confidential. With the recent signing of HR 4445, forced arbitration has ended for sexual harassment cases. 

Also, the Forced Arbitration Injustice Repeal (FAIR) Act just passed in the House. If enacted, it would end forced arbitration for other workforce conflicts. This includes all employer and consumer disputes, as well as civil rights and antitrust violations.

Maybe you are subject to forced arbitration with your employer and don’t even know it. Here’s what you have to know.

What is forced arbitration and why is it important?

There are two main problems with forced arbitration from a workers’ perspective, says Jessica Stender, policy director and deputy legal director at Equal Rights Advocates

Workers are less likely to win a case in arbitration than they are in court, and if they do win, they’re likely to not gain as much money on average, Stender told Fortune. 

“In arbitration, you have instead of a judge, a private arbitrator. This person has an inherent conflict of interest because the arbitrator is often being paid by the employer and often has multiple arbitrations with the employer,” she said.

Of course, this company bias is not always definitive with every mediator. According to the largest arbitration venue, American Arbitration Association (AAA), there is a rigorous process whereby neutral arbitrators are selected. Senior vice president Christine Newhall and vice president of marketing Michael Clark report that AAA gives employers and employees equal preference when selecting arbitrators and, in the case of consumers, throws out cases that do not follow their due process protocol.

That being said, there is no federal law that requires arbitration to be neutral or checks the enforcement of the independent standards that nonprofits like AAA have in place.

Another distinction with forced arbitration is that there is often a lack of records in private mediation. Court records are public, but in forced arbitration confidentiality is permitted. This lack of transparency can often lead to employers feeling isolated and less likely to report harassment. It also perpetuates a lack of company accountability, since widespread trends are not always visible to all. 

“There is essentially no paper trail. There’s no consistency of law being applied. So workers can be treated vastly differently,” says Julia Duncan, senior director of government affairs at the American Association for Justice. ”No one knows that this is not just a one-off problem, but a systemic problem. That’s the real evil of forced arbitration, is that it allows issues of systemic abuse to continue to go unchecked because no one knows about them.”

Lastly, the process of appeals is different in arbitration. There is no requirement that appeals are granted in forced arbitration. For AAA, the draw to this is that settlements are reached faster and conflicts are not dragged out. In anti-arbitration groups, this means that workers have no recourse if the arbitration unjustly favors the employer.

The changing politics of forced arbitration

The Federal Arbitration Act, enacted in 1925, allowed companies to require a private dispute resolution through arbitration. But when it was first introduced to the Supreme Court, workers advocate groups say this law was about conflicts between businesses. 

“Many years ago [forced arbitration] used to be a process that was confined to settling large commercial disputes,” Stender comments, “Over the last 40 years, it has really taken off as a way for companies to, in many ways, keep workers from being able to assert their workplace rights and obtain justice for violations of their rights.”

From there, forced arbitration clauses have permeated all sectors and stopped more than 60 million U.S. workers from bringing their cases to court. 

In terms of consumer and employee rights, the 1920s-era bill has become outmoded in our current economic climate. “It wasn’t written for a global economy, [it] certainly wasn’t written for an online economy, where you’re clicking, ‘I agree’ to everything in order to get any product or service,” comments Duncan when speaking of the Federal Arbitration Act.

HR 4445, which stops the use of arbitration for cases of sexual assault, had bipartisan approval and signaled a change in the way that politicians view arbitration. Stender attributes this in part to the #MeToo movement and the exposing of repeat offenders that were allowed to stay active due to the private nature of arbitration.

But due to the narrow scope of the HR 4445 bill, other cases like ones involving racial discrimination and wage theft can still be handled under arbitration. The recently reintroduced FAIR Act has passed the House and if it passes the Senate, would ban forced arbitration for all cases. 

While it might just seem like a fine line between arbitration and publicly suing a company, to workers’ rights groups there is a massive distinction.

“The difference between being able to file a lawsuit and being forced into arbitration is everything for a worker because being able to file a lawsuit is the one and only thing that gives a worker power and leverage,” says Duncan, “What workers and consumers need is their power back. They need leverage back.”