Blog Reviews

Mandatory Arbitration Clauses



The Mandatory Arbitration Clause made headlines last year when thousands of employees walked off the job at several Google worksites across the globe. The employees were protesting the handling of workplace issues and more specifically sexual harassment claims. Under the Google employment contract, those were handled through mandatory arbitration with no ability by the employees to pursue legal avenues such as class action lawsuits. After the protests occurred, Google relented and changed its policy.

What is Mandatory Arbitration?

Mandatory arbitration permits a business to require employees (and more recently consumers) to agree to arbitrate legal disputes rather than taking the employer to court. In this process, neutral “judges” called arbiters review evidence and decide the outcome. If there is a monetary award, it is called an arbitration award. Employers generally like this option as it is less expensive and time consuming than having the conflict settled in court.

Though the framework of the law was created nearly 100 years ago, it was not until the 1990s that corporate America latched on to the use of mandatory arbitration, after a number of Supreme Court decisions upheld its use. Today, more than 55 percent of the American (non-union) workforce has signed on as a term of employment. As the size of a company grows, so too does the percentage of employees under mandatory arbitration.

Mandatory Arbitration in Consumer Reporting Agencies

If you are an employer, we suspect you have given a lot of thought to the use of such clauses to protect your business interests. And, we hope you have made the wise choice to use background screening companies as a standard practice for your hiring. So here is a question to consider: How would you react to a Consumer Reporting Agency like Risk Assessment Group inserting mandatory arbitration clauses in its authorization forms?

We're in the position to help your company handle all of its background checks while keeping open the lines of communication to answer your questions and concerns. Our many satisfied customers include Fortune 500 companies employing thousands, to small companies with less than 100 workers. When we deliver this critical and sometimes confidential information to our clients, we take on a certain amount of risk. Would agreeing to such a clause should issues arise down the road make you rethink how your company uses us?

While this is not a widespread policy within our industry, many firms are beginning to take a serious look at it – and so are we. It’s an important trend that we will follow closely to see if it is right for us. We want to be the best partner possible in your quest to find the right hire. So, we’d love to hear your feedback. Please email us your thoughts at info@riskassessmentgroup.com.


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