This Burrito Includes an Arbitration Clause (How employer mandated arbitration clauses keep workers rights issues secret)


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Back in May, the Supreme Court issued its decision in Epic Systems Corp. v. Lewis. The nation’s highest court decided that employers could force their employees to sign arbitration clauses at threat of their jobs, and that those arbitration clauses then prevented employees from suing collectively when their employers stole their wages or harassed or abused them. That case included gas station workers who were required to drive around town and monitor competitors’ prices but weren’t paid for doing so. The Supreme Court decided that the gas station could force those employees into individual, secret arbitration proceedings to fight for their back pay, despite all of the employees having the exact same grievance based on the same obviously illegal policy.

Oren Nimni and I were unhappy about this. We explained how important it is for employees to be able to band together and take action together, especially where their individual claims for stolen wages might be only a few hundred dollars—a consequential amount for a low-wage worker but not enough on its own to hire a lawyer. We also worried about how litigating employment claims like wage theft and harassment in secret arbitration proceedings would force every single person to prove things all over again even though their colleagues might have proved the very same claims over and over again already. Arbitration gave employers what amounts to a free pass to continue illegal practices, because very few people can afford to do anything about it and even when they can, and even when they win, no one will know.

So secret arbitration clauses aren’t just hurting consumers, they are now also a workers rights issue. For example this story about Chipotle

Not to say we told you so, but enter Chipotle. Back in 2013, Chipotle employees began to sue for wage theft. The employees claimed that the company had policies that made them start work before clocking in, and made them clock out before finishing work. Essentially they were required to work without pay. They brought a class action eventually consisting of approximately 10,000 employees.

Did Chipotle respond by changing its policies and paying the employees what they were owed? Of course not. Instead, in 2014, it stuck an arbitration clause in its employment contract for all new employees and kept doing the same thing. Then it asked the court to dismiss from the case all the workers who were required to sign the arbitration agreements. And, because of the Supreme Court’s decision in Epic Systems, the district court in the Chipotle case dismissed more than 2,800 Chipotle workers from the suit. If those people want the money they earned, each one of them has to take Chipotle to secret arbitration.

The Chipotle case is still proceeding for the 7,000 or so employees in the suit who joined before Chipotle started forcing the arbitration clause on new hires. But this case shows the power and value of arbitration clauses to companies. Instead of paying its employees for the hours they worked, Chipotle could simply write up an arbitration clause and make new employees sign it. Then, even if it stole their wages, even if a federal court finds that it stole their coworkers’ wages using universally-applied policies, they will each have to go to secret arbitration if they want to get what they’re owed.

This is just one example. There must be dozens if not hundreds yet to be exposed.