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Low Wage Workers Impacted by Arbitration Agreements

As companies have drastically increased their use of arbitration agreements in their employment contracts, workers have increasingly challenged those contractual provisions. Many courts have consistently struck down such agreements as unenforceable because they restrict an employee’s right to due process by denying them access to the court system in the event that they have a dispute with their employer.

On the other hand, other courts have upheld questionable arbitration agreements, so it was only a matter of time before the U.S. Supreme Court was going to hear a case on a matter that has increasingly impacted workers all over the country. Our courts need a decision from the top court in the country to guide them, so they can all start ruling consistently on this important matter.

That day is near as the U.S. Supreme Court is currently hearing three cases, all of which deal with the question of whether companies should be allowed to include arbitration agreements in their employment contracts.

Amidst the legal debate comes a study whose results will not be surprising to employee advocacy groups across the country: According to a recent survey conducted by Alexander Colvin, a professor at Cornell University, 59.1% of African-American workers, 57.6% of female workers, and 53.5% of male workers are working under employment contracts that include arbitration agreements.

What this means is that more than half of all American workers (and an especially high percentage of low-earning workers) don’t have access to the court system if they have a dispute with their employer. They are bound by contract to pursue the dispute in arbitration, where they will have to cover all of their own expenses associated with bringing that arbitration against their employer. Not surprisingly, low-earning workers are less likely than high-earning workers to bring such an action against their employer if they have to foot the bill, especially if the claims involved are less than the costs of filing a case in arbitration.

For those who have the option of filing a lawsuit in court, they can combine their small claims with those of other employees who have been systematically cheated by the same employer, but arbitration does not allow for such a combination. As a result, many employees with small claims against their employer never bother to pursue the case at all, because to do so would require them to spend more than they would gain, and the vast majority of them simply cannot afford such an expense.

The other disadvantage low-earning workers face when forced to settle disputes in arbitration is the fact that all such proceedings are private. That means that, even if they’re successful, no other workers (or potential workers) will be able to learn anything about the dispute, even if they may have similar claims. As a result, millions of workers with similar claims may never know that they have a legitimate claim against their employer – which of course was part of the employer’s intention in including the arbitration agreement in the first place.

The Chicago overtime lawyers at the Chicago Overtime Law Center are investigating unpaid overtime claims against large retail chains such as Petsmart, OfficeMax, Staples, Smart & Final, Apple, Walgreen’s, CVS, Urban Outfitters, GAP, Abercrombie & Fitch, Limited, Forever 21, Macy’s, Target, JC Penney’s, Lowes, Burlington Coat Factory, Marshalls, TJ Max, Victoria’s Secret, Nieman Marcus, Saks Fifth Avenue, Best Buy, Home Depot, Apple, Best Buy, Sears, K Mart, J.C Penney, Walmart, Costco, PetSmart, REI, Office Depot and other retail chains for misclassifying employees as managers, erasing or altering time sheets or time records, pressuring workers not to report or record overtime, failing to pay for time spent on security checks, and otherwise failing to pay workers for overtime and other wages. If you are the victim this practice you can call us at one of our offices near Deerfield, and Aurora at (312) 869-4095 or contact us online.