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The practice of mandatory arbitration

Many employers in New York and around the country require their workers to sign contracts that include what are known as mandatory arbitration clauses. These provisions deny employees who are involved in disputes over issues such as discrimination or harassment the opportunity to argue their cases in court. Instead, they compel them to resolve their grievances before an independent third party and behind closed doors.

Forced arbitration clauses became a topic of hot debate in the wake of the Harvey Weinstein scandal and the #MeToo movement it gave rise to. Lawmakers in New York responded by enacting legislation that prohibits employers there from requiring workers to settle sexual harassment disputes behind closed doors.

The issue of forced arbitration has been particularly contentious in the technology sector. A case dealing with these matters involves a former PayPal employee who filed a complaint alleging gender discrimination against the San Jose-based online payment processor on April 25. The woman claims that she was passed over for a promotion because she was a mother with young children and the job required extensive travel. According to the complaint, the position was subsequently offered to a man who also had young children. PayPal denied the allegations in a press release. The press release also stated that the issue would be resolved through mandatory arbitration per the terms of the woman's employment contract.

The practice is criticized because arbitrators tend to come down on the side of employers in discrimination and harassment cases. Attorneys with employment law experience may advise workers subject to such provisions to gather substantial evidence of unfair treatment before stepping forward. Attorneys could also advocate on behalf of clients during arbitration proceedings just as they could in court.

Source: Gizmodo, "Ex-PayPal Employee Fights to Have Her Gender Discrimination Dispute Heard In Court", Melanie Ehrenkranz, April 25, 2019

Source: The New York State Senate, "Mandatory arbitration clauses; prohibited", accessed on May 3, 2019

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