Dive Brief:
- Lowe’s is compelling managerial employees to sign binding arbitration agreements by withholding bonuses from those who refuse, the Huffington Post reports. Managers that sign the agreement agree not to pursue any claims against the home improvement retailer in court or join a class action.
- According to the report, the agreement is dated March of this year and salaried managers and assistant managers must sign as a condition of their participation in the company's bonus program. The home improvement retailer has had to pay fines in the past for failing to pay overtime, according to the report. Lowe’s didn’t immediately return Retail Dive’s request for comment.
- Less than two weeks ago, the United States Supreme Court held in a 5-4 ruling that companies may require employees to resolve disputes individually — a process outside of the court system that involves no jury and, usually, no appeal — instead of through class or collective actions. The decision has the potential to save companies millions, as collective action awards can be substantial.
Dive Insight:
Such arbitration agreements aren't new — businesses have increasingly turned to such agreements because taking a dispute to a private mediator enables them to deal with employee complaints privately and efficiently. Most agreements include clauses that have workers forego collective action like a class action lawsuit.
In fact, Professor Alexander J.S. Colvin of Cornell University’s School of Industrial and Labor Relations last year found that more than half of private sector nonunion workers (about 60 million U.S. workers) are subject to mandatory arbitration in employment contracts — up from 2% in 1992. In addition, 41% agree to mandatory arbitration that waives their right to be part of a class-action or collective action, he also found.
The agreements are often presented to employees or work applicants as voluntary, but the language in a Lowe’s employment contract viewed by Huffington Post gives employees little wiggle room. In some cases, bonuses or even employment itself hinges on signing the agreement.
Many experts predict that the recent Supreme Court ruling will likely fuel increased use of mandatory arbitration agreements. But they can backfire, as when plaintiff attorneys, in taking on cases that involve many workers, bring several single-claimant arbitration claims at once, which can be more time-consuming and expensive than dealing with one class action lawsuit, according to law firm Seyfarth Shaw’s Wage & Hour Litigation Blog. Plus, claims can still land in court if they’re brought through the U.S. Equal Employment Opportunity Commission or any other federal agency.
