Shifting Cultural Values Influencing Arbitration Rules in US Companies


With increasing frequency over the last decade, large employers have been inserting clauses into their employment contracts requiring new hires to waive their right to file suit against the employer for any reason. Instead, these agreements required as a condition of employment, that any claims arising within the workplace be instead adjudicated through arbitration instead of the courts. Arguably, this trend protects employers at the expense of labor rights. But this may be changing due to recent shifts in societal perspectives. Here’s the latest on this important labor rights issue.

Axios reports that internet giant Google is eliminating its arbitration requirement from all new employee contracts, bowing to pressure from popular protests. In a functional sense this means Google will no longer force workers claiming they are the victims of harassment or discrimination to only seek redress through arbitration which may or may not require adherence to the laws and legal framework required and guaranteed by the U.S. legal/court system.

This development to a large extent reflects the sea of change in American society regarding the ongoing existence of widespread sexual harassment and misconduct as well as a growing recognition of the damaging effect of institutionalized racism, sexism, ageism and other biases that still exist in the nation. The ongoing emphasis among large corporations to project a positive public image in terms of corporate social responsibility (CSR) is driving many to reconsider the optics of legally restricting workers’ avenues for redress in instances where they feel they have been discriminated against.

With the rise of the #MeToo movement and other social movements aimed at raising awareness of abuses in the workplace, organizations are seemingly coming to the realization that the secrecy fostered by requiring private arbitration could be construed as, at best, tone deafness in the face of a very real social ill, and at worst, self-serving complicity in keeping it from being exposed.

For Google, the roll back of their arbitration requirement begins with their full-time workforce and also includes their contingent workforce. At this time though, Google will not require its suppliers of contingent or contract labor to waive any arbitration clauses they may have in effect in their own operations. This distinction reveals a challenge for any professional responsible for workforce management within their respective organization.

When the largest organizations begin to make important changes such as this, they’re often followed by not only their competitors, but also mid-sized and even small organizations as well. However, in the absence of any governmental regulation, there will be a high level of variability in the market as each company and each supplier will field its own policy in this regard. This is another reason why smart organizations engage the expertise of workforce management firms to help ensure visibility and control over their internal policies and those of their external staffing suppliers, EORs, PEOs and other outsourced workforce-related services.

This issue is highly fluid and susceptible to influence as society’s perspectives quickly evolve and change. Are you confident that your workforce management partners are staying ahead of the curve? If there’s any question, consider reaching out to nextSource to discuss your organization’s policy governing arbitration and your exposure to the policies in place within your supplier base.

To read more on this subject, turn to nextSource for expert guidance and visit our Managed Service Provider page.

More Articles