The Consentability of Mandatory Employment Arbitration Clauses

Binding ex-ante mandatory arbitration clauses in employment contracts and class action waivers are more commonplace than ever in the United States and their popularity continues to rise, as more than half of private sector non-union workers are currently bound by them. These clauses require that employees forego their Constitutional right to a day in court should a grievance or dispute arise, both directly, by mandating arbitration as the only avenue of redress, and indirectly, by eliminating (in many cases) the only financially realistic option of class action. Mandatory arbitration provisions often appear in agreements where the parties' attention is reasonably focused elsewhere (e.g., in employment agreements, the employee's focus goes to wages and benefits). Employees are not focusing on the details of how potential disputes will be resolved, so it is at best misleading to say that they have “consented” to arbitration just because they have signed a document that included a mandatory arbitration provision. Further, in most cases, the social benefits of arbitration clauses do not clearly outweigh the social harms. While one can imagine arbitration processes that actually work to the benefit of all, that is not the reality of mandatory arbitration for most employees (and most consumers). Arbitration is too often expensive, one-sided, secret, and generally impractical for small claims. In CONSENTABILITY, Professor Nancy Kim adopts a sliding scale approach for determining consent, under which consent is understood as a dynamic which is “context-dependent, incremental, variable, and relative,” as opposed to an all or nothing conclusion. Under Kim’s framework, a proposed activity is not consentable if (1) it’s not possible to validly consent; or (2) the social harms caused by the proposed activity outweigh the social benefits. This article proposes that each of Kim’s “consent conditions” (voluntariness, knowledge, and manifestation of assent) is insufficiently robust when talking about boiler plate with an often-buried mandatory arbitration clause, especially when the contract is for employment that is essential to the consenting employee's well-being. Accordingly, this article suggests that there should be a rebuttable presumption of no valid consent to mandatory arbitration clauses in employment contracts, even when an employee “manifests” consent with a signature or click, with the presumption rebutted only by a showing by the employer that the term was agreed to through negotiation by parties with roughly equal bargaining power.