Imposing Injustice: The Prospect of Mandatory Arbitration for Guestworkers
Introduction
By Annie Smith0
Legislators and employers have taken steps in recent years to expand guestworker visa programs, programs that allow employers to recruit and hire foreign workers to temporarily labor in the United States. At the same time, there have been efforts to reduce the role of public law in guestworkers’ lives and limit their access to courts. Some legislators proposing reforms to guestworker visa programs have endorsed employer-led efforts to prevent judicial oversight of guestworkers’ claims and mandate private arbitration instead. Outside of Congress, recent Supreme Court decisions confirm the Court’s broad approval of mandatory arbitration as an acceptable alternative to litigation and lend support to employer efforts to privatize the adjudication of guestworkers’ claims.
This article predicts that converging trends in employment practices and dispute resolution processes will create a growing underclass of guestworkers and undermine workplace standards for all workers. The article first evaluates low-wage guestworkers’ unique vulnerability and the abuses they commonly experience. Next, the article assesses the status of mandatory arbitration in employment relationships, challenges commonly held myths about mandatory arbitration, and explores the potential consequences of the increased use of mandatory arbitration for low-wage guestworkers and U.S. workplaces.
The article concludes that mandatory arbitration applied to guestworkers would represent the harmful withdrawal of public law from a group of workers to whom the government should give public protection. This conclusion is grounded, in part, in evidence that private mandatory arbitration would not be a meaningful alternative to litigation for low-wage guestworkers. Rather, it would magnify guestworkers’ vulnerability and threaten to adversely impact their working conditions while also unfairly disadvantaging U.S. workers and law-abiding employers. Therefore, this article warns against the forced relegation of employer-guestworker disputes to arbitration. Instead, it proposes a legislative strategy for protecting guestworkers’ substantive and procedural rights.
II. Low-Wage Guestworkers in the U.S.
A. Overview of Guestworker Visa Programs
B. The Unique Vulnerability of Low-Wage Guestworkers
a. Control of Immigration Status
c. Control of Current and Future Income
3. Limited Legal Knowledge and Access
C. The Consequences of Vulnerability
III. Contractual Limits on Access to Justice: Mandatory Arbitration
A. The State of Mandatory Arbitration
B. Employer Efforts to Mandate Arbitration for Guestworkers
IV. Prevailing Myths About Mandatory Arbitration
C. The Affordable Alternative Myth
V. Consequences of Mandating Arbitration for Guestworkers
A. Consequences for Guestworkers
1. Limited Procedural Protections and Remedies
2. De Facto Waiver of Statutory Rights
3. Inadequate Protection from Retaliation
B. Consequences for U.S. Workers, Employers, and Public
3. Perverse Incentive to Hire Guestworkers
4. Unfair Competition for Employers
VI. Legislative Recommendations
Anumang kontrobersiya o paghahabol na magmumula sa o may kaugnayan sa relasyong pang-empleyong ito ay isasaayos sa pamamagitan ng arbitrasyon sa pangangasiwa ng American Arbitration Association sa ilalim ng Employment Arbitration Rules at Mediation Procedures nito at ang hatol sa kaloob ng arbitrador ay maaaring ipasok sa anumang hukuman na may hurisdiksyon hinggil doon.
Any controversy or claim arising out of or relating to this employment relationship shall be settled by arbitration administered by the American Arbitration Association under its Employment Arbitration Rules and Mediation Procedures and judgment upon the award rendered by the arbitrator(s) may be entered in any court having jurisdiction thereof.1
A woman said goodbye to her family and friends and made the trip by bus from her hometown in rural Mexico to the city of Monterrey. She carried her visa and passport, a small book of family photos, and a bag of clothes. When she arrived at the recruitment agency that facilitated her hiring for a temporary job in the U.S., she was presented with a stack of papers in English. The labor recruiter told her she had to sign several of the pages before departing. Because she could not understand the English documents, the recruiter pointed to where she had to sign on each page and she did. Though she did not know it, she had just agreed to resolve any future disputes with her U.S. employer by arbitration. After the documents were signed, she and her new co-workers boarded the bus to the airport to begin their journey to work cleaning hotel rooms as guestworkers in the U.S.
Tens of thousands of guestworkers travel to the U.S. each year from Mexico, the Philippines, South Africa, Jamaica, and other countries to temporarily work in low-wage jobs.2 They plant trees, harvest tomatoes, mow lawns, and wait tables in country clubs. Some work for the time permitted by their visas and return home without incident. Others experience violations of their workplace rights; they are underpaid, injured, harassed, discriminated against, coerced to work, threatened, and assaulted.
Low-wage guestworkers are readily-available and uniquely vulnerable employees. Employers must submit applications for permission to hire guestworkers, but, once approved, they can select from a nearly limitless supply of temporary foreign employees.3 While in the U.S., guestworkers are authorized only to work for their designated employers and become part of a captive, easily replaceable, and temporary workforce.4
Despite publicized reports of serious abuses,5 guestworker visa programs continue to expand. The total number of guestworker visas issued annually has nearly doubled from about five and a half million in 1993 to roughly nine million two decades later.6 Even during periods of record-high unemployment rates, the visa programs consistently garner substantial interest from powerful business interests, and members of Congress have taken steps in recent years to increase the number of available visas.7
Meanwhile, over the last two decades, there has also been an increase in employers’ use of mandatory arbitration to resolve workplace disputes.8 Mandatory arbitration requires parties to submit their disputes to a private, binding dispute resolution process subject to extremely limited judicial review. In the employment context, mandatory arbitration is used to resolve statutory claims, such as discrimination and minimum wage violations, as well as contractually-based claims.9
There is no readily available information about whether employers are currently requiring or enforcing mandatory arbitration provisions against guestworkers, or whether guestworkers are initiating arbitration actions against their employers.10 There are no known cases filed by guestworkers where the employer sought to enforce a mandatory arbitration clause. Informal surveys of legal services and other plaintiffs’ counsel who represent guestworkers also did not reveal any such cases. Of course, it is possible that some guestworkers have initiated arbitration, but researchers cannot reliably access that information as it is neither compiled nor publicly-available.
While mandatory arbitration is not yet pervasive for low-wage guestworkers, there is evidence that employers will increasingly impose mandatory arbitration on guestworkers as a condition of employment. Starting as early as 2008, some employers included mandatory arbitration requirements in their guestworker visa applications.11 More recently, legislators proposing reforms to guestworker visa programs endorsed employer-led efforts to prevent judicial oversight of guestworkers’ claims and mandate private arbitration instead.12
Congress should prohibit employers from imposing mandatory arbitration on low-wage guestworkers.13 This is necessary for three reasons. First, mandatory arbitration would make already vulnerable guestworkers even more susceptible to abuse and inhibit their ability to hold law-breaking employers accountable. Second, relegating guestworkers’ workplace disputes to private arbitration would harmfully limit information available to the public. Third, limiting guestworkers’ access to the courts will negatively impact U.S. workers and law-abiding employers.
Federal legislation is required to prevent this problem. Recent Supreme Court decisions make clear that the Court will continue to interpret the Federal Arbitration Act (“FAA”) with sweeping breadth and enforce nearly all arbitration clauses.14 The Court has interpreted the FAA broadly to impose nearly no limits on the enforceability of arbitration agreements and extend the scope of the Act far beyond its original intent.15 In the example of the guestworker provided above, the mandatory arbitration agreement she signed would very likely be enforceable under existing law, despite her utter lack of understanding of the content of the contract, its adhesive nature, and the coercive timing of its presentation just before she was supposed to depart for the U.S. To remedy these problems, this article proposes federal legislation that would prevent the forced relegation of employer-guestworker disputes to arbitration.
Part II of this article provides a brief overview of guestworker visa programs and discusses the unique vulnerability of low-wage guestworkers and abuses that result. Part III describes the status of mandatory arbitration in employment relationships and employers’ initial efforts to mandate arbitration for guestworkers. Part IV assesses the myths commonly used to support mandatory arbitration and articulates why arbitration’s purported benefits are particularly illusory for low-wage guestworkers. Part V considers the U.S. government’s responsibility to guestworkers and concludes that arbitration is not a meaningful alternative to litigation for low-wage guestworkers; rather, it would magnify their vulnerability and threaten to adversely impact working conditions while unfairly disadvantaging U.S. workers and law-abiding employers. Part VI, therefore, proposes a legislative strategy to protect low-wage guestworkers’ substantive and due process rights.
II. Low-Wage Guestworkers in the U.S.
A. Overview of Guestworker Visa Programs
Guestworker programs in the U.S. have a troubled past. Early guestworkers were recruited from Mexico during World War I to perform agricultural work under a project that continued in World War II as the Mexican Labor Program, known colloquially as the Bracero program.16 At its largest, the program employed nearly half a million Mexican men each year.17 During World War II, guestworker programs were also established with Jamaica, Barbados, and the Bahamas.18 Among the abuses experienced by these early guestworkers were extremely poor living conditions, unpaid wages, physical abuse, and lack of access to medical treatment.19
In 1952, as part of the first comprehensive immigration legislation, the Immigration and Naturalization Act (“INA”), a temporary foreign worker program was created. It included an H-2 visa for low-wage sectors, including agriculture.20 Reforms to the INA in 1986 divided the H-2 visa into an H-2A visa for agricultural work and H-2B visa for temporary and seasonal non-agricultural work.21 While low-wage workers are also employed under other visas, most notably the J-122 and H-1B,23 this article focuses on the H-2A and H-2B visas—the visa programs designed to supplement the workforce in agriculture and other “low skill” work.24
Under the H-2A visa program, foreign workers can enter the U.S. to perform temporary or seasonal agricultural work.25 The H-2B program permits foreign workers to perform temporary nonagricultural work, or work that meets a seasonal, peak load, or intermittent need.26 Among the top H-2B occupations are landscaping, food service, amusement park work, forestry, housekeeping, construction, and industrial commercial groundskeeping.27
Guestworker visa programs are intended to achieve the dual and potentially conflicting goals of meeting employers’ temporary labor needs while protecting the interests of U.S. workers.28 Employers are prohibited from discriminating against U.S. workers.29 To protect U.S. workers, employers must offer the same terms and conditions of employment to them as to H-2A and H-2B guestworkers.30 To prevent the displacement of U.S. workers, employers seeking to employ H-2A and H-2B guestworkers must apply for labor certification, demonstrating that there are insufficient qualified U.S. workers available to perform the work and that employment of guestworkers will not adversely impact the wages or working conditions of U.S. workers.31 If certification is granted, the employer may submit a petition to employ foreign workers.32 Once approved, foreign workers apply for the H-2A or H-2B visa to work for the employer. To ensure employment of guestworkers doesn’t depress U.S. wages, employers must pay special rates set by federal law.33 Guestworkers under the H-2A and H-2B programs may be hired for temporary work of a period of up to one year.34 Under both programs, the employer can seek to extend a guestworker’s stay to a period of up to three years.35 At the end of their visa period, guestworkers are required to return home.36 There is an annual statutory limit of 66,000 H-2B visas issued,37 and no limit on the number of H-2A visas issued.38
Due in part to the determined advocacy efforts of guestworkers and their allies, the H-2A and H-2B visa programs also include provisions intended to protect the interests of the guestworkers. Protections for H-2A guestworkers include a requirement that the employer will provide: a guarantee of employment for at least three quarters of the employment contract period; free safe housing, daily transportation, and the tools, supplies, and equipment needed to perform the job; three meals per day at cost or free cooking facilities; workers’ compensation insurance; a copy of their employment contract or the employer’s visa program application materials; and earnings statements.39 H-2A guestworkers are eligible for legal representation in some employment-related matters by federally-funded legal services programs.40 Employers are prohibited from retaliating against H-2A guestworkers.41
Protections for H-2B guestworkers are more limited than those for H-2A guestworkers and have been the subject of substantial controversy. Implementation of the 201242 and the superseding 201543 H-2B regulations promulgated by the U.S. Department of Labor (“USDOL” or “the Department”) were stalled in protracted litigation.44 Opponents of protections for H-2B workers successfully rolled some of them back using policy riders to the 2016 appropriation bills.45 Unlike under the H-2A program, employers of H-2B guestworkers are not required to provide housing, meals, or cooking facilities. The employer must only pay for return travel costs where the H-2B guestworker is dismissed prior to the end of the work contract period.46 Existing legal requirements for both H-2A and H-2B guestworker programs remain insufficient.47
The availability and use of guestworker visas has grown since the programs’ inception. In their first year, just forty-four H-2A visas were issued.48 Since then, the number of H-2A visas annually has increased to 89,274 in 2014.49 The annual number of H-2B visas issued has risen from sixty-two visas in 1987 to 68,102 in 2014.50
Guestworker programs are likely to persist and expand. For over a decade, there has been substantial interest in increasing the size and scope of guestworker programs.51 Any serious proposal for comprehensive immigration reform has included an expansion of the guestworker programs. Given the prevalence and persistence of guestworker visa programs, it is critical to understand the special vulnerability of guestworkers, the government’s responsibility to protect guestworkers, and how permitting employers to mandate arbitration would be a failure to protect them.
B. The Unique Vulnerability of Low-Wage Guestworkers
The structures of the H-2A and H-2B guestworker visa programs combined with challenges inherent to being a low-income foreign worker laboring far from home combine to make guestworkers vulnerable to workplace abuse.52 Their vulnerability is caused in large part by employment-related debt, physical, linguistic, and social isolation, and employer control over guestworkers’ immigration status, housing, and current and future income.53
Many guestworkers must incur substantial debt for the opportunity to work in the United States.54 Common pre-employment expenses include medical exams, visa fees, and travel expenses.55 Guestworkers’ documented expenses have ranged from $100 to $20,000.56 Expenses can be well over an individual’s annual income in their home country, and most prospective guestworkers must borrow money to pay, sometimes at very high interest rates or with their family’s property as collateral.57 The debt may be directly to the employer, labor contractor, or recruiter, or to individuals or entities not directly associated with the work, like a family member or lending institution.58 Despite the high costs, guestworkers come to the U.S. because they believe they will make sufficient money to cover any expenses and still earn money for themselves and their families.59
H-2A and H-2B employers and their agents are prohibited from charging guestworkers recruitment fees.60 H-2A employers are also prohibited from seeking or receiving any payment for costs associated with obtaining labor certification.61 Nevertheless, employers and their recruiters sometimes charge unlawful fees and put guestworkers further into debt.62
Employment-related debt increases guestworkers’ vulnerability to workplace abuse.63 They may be reluctant to raise concerns at work for fear of losing their job and thus their ability to pay back loans. Bad actor employers exploit this financial pressure, telling guestworkers that they will be fired should they complain or seek to improve their working conditions.64 Fearful of forfeiting their family home or other negative consequences, guestworkers may be coerced to continue working in unlawful conditions.65 Extreme coercion related to guestworker debt has been recognized as a form of human trafficking.66
While power dynamics in the employment relationship almost always favor the employer, the imbalance is extreme in the context of guestworkers.67 It is amplified by the employer’s control of guestworkers’ immigration status, housing, and ability to earn income. Employers’ pervasive control vastly increases guestworkers’ vulnerability to abuses in the workplace and puts them at a heightened risk for retaliation.68
a. Control of Immigration Status
Guestworkers’ immigration statuses are tied to their employers. H-2A and H-2B employers apply for and hold their employee guestworkers’ visas.69 The visas are not portable; a guestworker’s visa is linked to their employer and, if their job ends, the guestworker loses their immigration status and ability to remain and work in the U.S.70
Advocates for guestworkers have repeatedly identified lack of visa portability as one of the most troubling aspects of guestworker visa programs.71 When the employer controls a worker’s immigration status, they may feel empowered to violate the law, knowing guestworkers may be unwilling to speak up about illegal working conditions for fear of losing their job and ability to remain and work in the U.S.72
Employers commonly provide guestworkers’ housing.73 The H-2A program requires it.74 While this arrangement can be beneficial, employer-provided housing creates another potential source of vulnerability for guestworkers.75
When an employer controls an employee’s housing, the employee may feel they have no space that is private or outside of their employer’s control. They lack a place where they can talk openly about workplace or other concerns, have visitors, make private telephone calls, or be safe from employer threats of physical harm.76 In addition, they may fear becoming homeless should the employment relationship end. This can be particularly frightening for guestworkers who do not have a support system or know anyone in the U.S. other than their employers and co-workers.
c. Control of Current and Future Income
Guestworkers’ employers control their current and possibly future income. The only lawful way for a guestworker to earn wages in the U.S. is by working for their designated employer. Thus, a guestworker cannot easily leave their job and seek work elsewhere if the job is unpleasant, they have very few hours of work, or are subjected to illegal working conditions. To do so would mean violating the terms of their visa and possibly impacting their ability to return to the U.S.77 In addition, the guestworker would lose any income they were earning and the ability to pay back debts incurred to come to the U.S. in the first place.
Employers can also limit guestworkers’ future prospects. Employers can recruit guestworkers from all over the world. The threat of blacklisting guestworkers or their entire community by employers and recruiters further enhances the vulnerability of guestworkers.78 In some industries, recruiters in home countries identify workers using word of mouth and recommendations so workers fear harming their own and their community’s prospects if they complain about working conditions.79
Guestworkers regularly experience physical, linguistic, social, and cultural isolation. This profound isolation places guestworkers at greater risk for abuse and, when abuses occur, creates substantial barriers to understanding and enforcing their rights under U.S. law.
Many guestworkers live in physical isolation.80 For example, agricultural guestworkers commonly live at remote employer-owned housing located near the fields where they work. They may be many miles from their nearest neighbors and not know the name of their road or the town where they live. Many low-wage guestworkers do not have their own transportation and, if they are in a remote or even suburban area, may not have access to public transit.81 Thus, they may rely exclusively on their employer if they want to go anywhere and come into contact with few people other than those related to their employment.82 Physical isolation enhances guestworkers’ actual and perceived vulnerability. They are in the middle of nowhere with neither the means nor knowledge to get anywhere else.83 This profound isolation puts guestworkers at greater risk for physical violence as well. They are truly at their employers’ mercy with no one around to intervene if violence erupts.84
Guestworkers frequently experience linguistic isolation. Guestworkers come to the U.S. from throughout the world. Many speak English as a second language or not at all. While some guestworkers read and write fluently in English, others speak only languages, such as Mixteco Bajo, which have no written component and are not commonly spoken in the U.S.85 Depending where guestworkers live and work, they may not come into contact with anyone other than co-workers who speak their language. Some employers use supervisors from the same country of origin as guestworkers and who speak their language, but this too can create vulnerability as the supervisor then controls communication between the guestworkers and employer.86
Linguistic isolation creates vulnerability to abuse. To the extent that guestworkers are linguistically isolated, they may feel they have no rights or available support and have difficulty understanding their rights, communicating their needs, or accessing legal or other support when their rights are violated.87 They can also be more readily controlled by bad-actor employers and supervisors, their only source of information, who can limit information conveyed or deliberately provide misinformation.88
Social isolation results in additional vulnerability.89 Guestworkers live far from their families, friends, and religious and other community institutions. While they may travel to the U.S. with friends and family or eventually develop relationships in the U.S., their employment is relatively brief and they tend to be socially isolated.90 When something goes wrong at work, socially isolated guestworkers may not know where to turn for assistance or may feel there is no one available or able to help. They may also feel that, by comparison, the employer is extremely well-connected and thus even more powerful.91
Guestworkers may also experience profound cultural, ethnic, and racial isolation. For example, indigenous Maam-speaking forestry workers from Guatemala may be working in rural Arkansas where the majority of the population is white and English-speaking. As a result of these differences, guestworkers may perceive that they are outsiders in a hostile setting and not safe. This perception may lead them to remain isolated and to believe they have no choice but to submit to whatever the employer requires.
3. Limited Legal Knowledge and Access
For many reasons, including those listed above, guestworkers may not have information readily available regarding their workplace rights or how to enforce them.92 Recognizing the vulnerability of guestworkers and their possible lack of information about their legal rights in the U.S., Congress included a provision in the William Wilberforce Trafficking Victims Protection Reauthorization Act (“TVPA”) that requires the creation and distribution of materials to guestworkers about their workplace rights and how to access assistance.93 Despite these efforts, confusion and misinformation regarding rights remain.94
Guestworkers may have difficulty securing legal representation.95 Across the country, there is a crisis in access to legal representation for low-income individuals who cannot afford to pay a private attorney.96 Guestworkers face additional challenges when seeking to access attorneys as some classes of guestworkers are ineligible for Legal Services Corporation (“LSC”) funded legal services and private attorneys are frequently uninterested in or unable to take these cases.97 H-2A workers and H-2B workers working in the forestry industry are eligible for LSC-funded legal services.98 Unless they are a victim of domestic violence, extreme cruelty, or human trafficking, other H-2B guestworkers are not.99 In addition to these barriers, guestworkers may struggle to communicate with attorneys in their language, particularly as guestworkers arrive from an increasingly wide array of countries.100
C. The Consequences of Vulnerability
Given the many potential sources of guestworker vulnerability, it is unsurprising that there have been numerous violations of guestworkers’ employment-related rights.101 Among the abuses are: failure to pay required wages,102 discrimination and harassment,103 physical injuries due to hazardous working conditions,104 unsafe housing conditions,105 human trafficking,106 and retaliation.107 Guestworkers have also experienced fraud and breach of contract.108 These abuses affect guestworkers of all kinds. One longtime farmworker advocate observed, “What has been striking to our group is that regardless of sector, or visa category, there are common abuses.”109
Guestworkers risk retaliation when they seek to enforce the law or improve their working conditions.110 Documented cases of retaliation include loss of work hours, termination, blacklisting, and threats of physical and financial harm.111 Blacklisting in particular is a threat sometimes turned on a guestworker’s entire community if they complain or seek to improve their working conditions.112
III. Contractual Limits on Access to Justice: Mandatory Arbitration
When faced with the abuses and violations of statutory rights detailed above, guestworkers may seek to enforce the law in U.S. courts. Unlike many other low-wage workers, employers are required to enter into written contracts with H-2A guestworkers. While not required by law,113 H-2B employers may choose to use employment contracts as well. In theory, these contracts may both augment and limit rights. In practice, because the contracts would be drafted and provided by employers and are not negotiated, they may just recite the requirements of the law or include provisions more favorable to the employer. Among the provisions that would favor employers are mandatory arbitration provisions
A. The State of Mandatory Arbitration
Arbitration is the binding resolution of a dispute by a private third party neutral. It can be mandated by statute or private agreement. Arbitration agreements are a form of forum selection clause that contractually commits the parties to forego litigation and resolve disputes through arbitration. The scope of the disputes covered, procedures permitted, and remedies available vary by agreement.
Unlike litigation, arbitration is a private process.114 With few exceptions, arbitration proceedings and their outcomes are not recorded, compiled, or publicly available.115 Arbitrators116 do not always produce written decisions explaining their reasoning.117 Discovery is usually quite limited and may be further restricted by the parties. Judicial review of arbitrators’ decisions is extremely narrow.118 Arbitral awards are final and binding.119
Although historically disfavored, the Supreme Court has consistently upheld the enforceability of arbitration agreements since its decision in Gilmer.120 Subsequent decisions have repeatedly demonstrated the Court’s broad approval of mandatory arbitration.
The Court’s reasoning in these decisions rests heavily on the Federal Arbitration Act (“FAA”).121 The Act, enacted in 1925, was passed before employment protections such as the minimum wage requirement and prohibitions on discrimination existed.122 The FAA mandates that arbitration clauses contained in contracts involving maritime transactions or “evidencing a transaction involving commerce” are enforceable and “shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract.”123 The Act has been repeatedly interpreted as expressing a “national policy favoring arbitration”124 and is regularly applied by courts to employment disputes involving statutory claims.125 Some scholars argue this is a gross misinterpretation of the Act and that such an expansion was never intended by Congress.126
Properly-drafted arbitration agreements127 are routinely enforced by courts in employment disputes.128 The decisions are most likely to arise in the context of an employer’s motion to stay or dismiss a lawsuit and compel arbitration when an employee initiates a lawsuit in court. While it is possible that an employee would seek to enforce an agreement to arbitrate, it is extremely uncommon.129
Courts apply state law contract principles when deciding whether there is a valid agreement to arbitrate. As with any contract, there must be consideration to have an enforceable agreement.130 There may be insufficient consideration if the parties entered into the agreement prior to hiring or if the employer had the unilateral authority to alter, amend, or revoke the arbitration agreement.131 Courts also require acceptance by the employee,132 but this requirement is easily met. For example, by continuing to work after the employer provides notice of a mandatory arbitration policy.133
Courts occasionally find otherwise valid arbitration agreements unconscionable and thus unenforceable. Agreements have been voided where they unreasonably favor the employer, where there was an effort to mislead or deceive the employee regarding the agreement,134 and where there was no meaningful opportunity to negotiate, a high degree of difference in bargaining power, or negotiations and terms were beyond the comprehension of an ordinary employee.135 These challenges, however, are very rarely successful. Courts overwhelmingly find arbitration agreements enforceable, even when the concerns detailed above are present.
With the judiciary’s broad approval, arbitration is mandated in a wide variety of contexts, from consumer contracts to employment relationships. Arbitration agreements are now quite commonly required by employers as a condition of employment.136 One scholar estimates that 36 million employees are subject to mandatory arbitration.137 Enforceable arbitration mandates need not be in a written contract signed by the employee. They have been included in offer letters, in notices included with paychecks, and in employee handbooks.138
Among the reasons employers may prefer arbitration are the perceptions that it limits damages, shields the employer’s alleged unlawful conduct and case outcomes from public view, limits discovery, and is cheaper and faster than litigation.139 Some employers and their counsel view mandatory arbitration as a useful risk-management strategy.140 While there are a very few cases involving highly compensated employees seeking to enforce arbitration clauses, there is no literature or evidence that suggests that employees prefer arbitration to litigation.141 The increase in mandatory arbitration in employment relationships has been driven by employers and approved by the courts.
B. Employer Efforts to Mandate Arbitration for Guestworkers
The U.S. Chamber of Commerce142 identified “protect[ing] the use of binding arbitration in employment” as one of its policy priorities for 2015. It also identified expansion and streamlining of the guestworker visa program as a policy priority along with opposing increases to the minimum wage, mandated sick leave, posting employee injuries online, strengthened ergonomic standards under the Occupational Safety and Health Act (“OSHA”), and “efforts to modify Family and Medical Leave Act (“FMLA”) and Fair Labor Standards Act (“FLSA”) regulations to be less favorable to employers.”143 The Chamber’s National Chamber Litigation Center’s policy priorities included “defend[ing] arbitration agreements against legal challenges intended to eliminate arbitration as a faster, cheaper, and fairer alternative to litigation” and “prevent[ing] expansion of private civil liability under key federal and state laws.”144
Employers and those who advocate in their interest have made initial efforts to mandate arbitration for guestworkers. Some employers have sought to limit their guestworker employees’ access to courts by requiring arbitration instead. Others have lobbied to lay the legislative groundwork to ensure that mandatory arbitration provisions will be enforceable in court.
Agricultural employers have required H-2A guestworkers to agree to mandatory arbitration.145 Starting as early as 2008, agricultural employers included this term in their H-2A application documents.146 Prior to April 1, 2011, applications including mandatory arbitration provisions were routinely approved by USDOL.147 However, beginning in 2011, the Department acknowledged that it had erred and began rejecting H-2A applications that included mandatory arbitration provisions.148
The Department’s current position is that, in order to preserve the jobs and working conditions of U.S. workers, the H-2A program requires that “each job qualification and requirement . . . be bona fide and consistent with the normal and accepted qualifications required by employers that do not use H-2A workers in the same or comparable occupations or crops.”149 The requirement that H-2A guestworkers submit to arbitration is not normal and accepted among other, comparable workers and thus violates the regulation.150
When USDOL began to reject applications that contained arbitration provisions, nine employers objected and appealed. The majority of the resulting decisions affirmed and upheld the rejections.151 Since this initial spate of rejections and appeals, agricultural employers appear to have ceased including arbitration provisions in their H-2A applications.152
The equivalent H-2B regulation, promulgated after the 2011 H-2A decisions,153 makes clear that “requirement” means a term or condition of employment, arguably including a mandatory arbitration provision. If arbitration is not normal and accepted among similar U.S. workers, USDOL and guestworkers’ advocates can make the same arguments for H-2B guestworkers as they did in the H-2A context.154
So long as USDOL maintains its current perspective and consistently identifies and rejects H-2A and H-2B visa applications that include arbitration provisions, this approach may be sufficient. However, a change in the administration could mean a corresponding change in the Departments’ treatment of these provisions. In addition, if mandatory arbitration clauses become more pervasive in agriculture and the industries that employ H-2B guestworkers, the Department will be forced to approve applications that include arbitration provisions.155 There is also the possibility that the employer will institute the policy after the guestworker has begun working, so the Department would not be able to easily intervene.
In addition to employers including mandatory arbitration provisions in guestworkers’ employment contracts and job orders, there have been efforts to authorize mandatory arbitration in proposed reforms to the guestworker programs. There have been numerous legislative efforts to reform the H-2A program.156 Since 1998, attempts were made to reach a compromise between agricultural employers and farmworker advocates and activists.157 However, the resulting bills were never enacted.158 Early reform efforts protected guestworkers by providing for just-cause terminations,159 but required arbitration of any resulting wrongful termination claims.160
More recent proposals to reform the H-2A guestworker program sought to restrict guestworkers’ rights while endorsing employer-mandated arbitration. The “Better Agriculture Now” Act (hereinafter “H.R. 3443”), introduced in 2011, would have required LSC-funded legal services programs to “respect the arbitration process and outcome” if the employer and guestworker “have an arbitration arrangement.”161 The American Specialty Agriculture Act” (hereinafter “H.R. 2847”), also introduced in 2011, and “Agricultural Guestworker Act” (hereinafter “H.R. 1773”), introduced in 2013, would both require that, so long as the employer gave notice at the time the job offer was made, agricultural guestworkers could be subject to mandatory arbitration and mediation of “any grievance relating to the employment relationship” as a condition of employment.162 Several of the bills would have also required covered guestworkers to submit to mediation prior to filing suit in court.163
It should come as no surprise that many of the same legislative proposals that would endorse mandating arbitration for guestworkers seek to increase the number of guestworkers while further reducing workplace protections and access to legal representation and courts.164 For example, H.R. 1773 would lower and withhold wages and eliminate requirements that employers provide housing and travel-expense reimbursement.165 H.R. 3443 and H.R. 2847 would prohibit LSC-funded legal programs from representing guestworkers unless they are in the U.S. at the time legal assistance is provided and the parties engage in mediation or other non-binding dispute resolution.166 They would also restrict LSC-funded legal programs’ outreach to guestworkers who reside on their employer’s property unless they have a “prearranged appointment.”167 All of these proposed changes are aimed at severely limiting guestworkers’ access to justice and reducing the legal exposure of their employers. Mandatory arbitration appears to be part of a broader effort to limit the rights and remedies available to guestworkers.
IV. Prevailing Myths About Mandatory Arbitration
Those who support mandatory arbitration agreements present a variety of arguments in their favor. Proponents argue that agreements to arbitrate are consensual and that arbitration offers a speedy resolution of disputes, is an affordable alternative to litigation, is readily accessible to pro se parties, has comparable outcomes to litigation, and is a fundamentally fair process.168 However, on examination, these claims frequently fall short. The alleged benefits of arbitration come at too high a cost or are altogether illusory for many.169 This is especially true when considering the unique circumstances of guestworkers. The six prevailing myths about arbitration and why they especially fail with regards to guestworkers are discussed below.
In many circumstances, arbitration agreements do not involve any agreement at all. There is an absence of meaningful consent in many pre-dispute arbitration agreements due to the timing of the agreement, asymmetrical information, and profound power imbalances. This is especially true for guestworkers.170
Enforcement of mandatory arbitration agreements is often justified on freedom of contract principles.171 From that perspective, the clauses are just another contractual term that parties can negotiate, choose to accept or reject and, once accepted, enforce. While this can certainly be true for parties with equal experience and bargaining power, it does not apply in the employment context; the profound power differences between most employers and their employees—particularly non-unionized low-wage employees—belie this formalistic view.172 Given recent rates of unemployment and the pressures of global poverty, it is not realistic to expect a prospective employee to decline to enter into an employment relationship or leave ongoing employment when their employer mandates arbitration of future disputes as a condition of employment.173
While an employee may sign an employment contract or policy that contains a mandatory arbitration provision, the employee may not understand what the provision means or the consequences of committing to arbitration. Although they may be offered the opportunity, most employees cannot afford to consult with an attorney, reject a prospective job, or leave an existing job because the employer insists on arbitration as a condition of employment. Threats to terminate an employee for failure to accept an agreement to arbitrate employment claims, including claims under Title VII of the 1964 Civil Rights Act (“Title VII”), are not illegal.174 Agreements signed under these conditions will be enforced by the courts.
If there is a written employment contract or arbitration policy, the employer may not provide it in a language the guestworker can read or understand.175 Employers may otherwise coerce guestworkers to sign the contracts, including by waiting to present the contract until the guestworker has already gone into debt or traveled to the U.S. to begin work.176 The employer could also engage in fraud by telling guestworkers the contract is not binding or misrepresenting what the arbitration language means.177
Guestworkers’ lack of meaningful bargaining power makes them particularly vulnerable to coercion.178 Beyond the already substantial difference in bargaining power between a low-wage worker from the U.S. and their U.S. employer, guestworkers may live in remote places with few employment opportunities and compete with a near-endless supply of other migrants from throughout the world.179
Guestworkers are foreign individuals entering the U.S. for short-term employment. Many do not speak or read English and thus cannot read or understand the documents they purportedly consent to. They are very unlikely to be aware of their employment rights under U.S. law, the procedural protections offered by litigation in U.S. courts, or the relative benefits of arbitration and litigation. In contrast, employers may develop employment policies, including mandatory arbitration, in consultation with experienced employment attorneys. While sufficient for court approval, the asymmetry in information available to the parties raises serious concerns about consent.
The timing of the requirement to enter into a mandatory arbitration agreement also impacts consent. Guestworkers are frequently not provided with written employment contracts at all. When they are, it is after they have made a substantial commitment of time and money and cannot afford to lose the job opportunity.180 Thus, it is difficult to imagine guestworkers can truly refuse to accept an arbitration provision once they have already borrowed hundreds or thousands of dollars to pay for the expenses associated with getting hired and approved to come to the U.S. Should a guestworker’s employer institute a mandatory arbitration policy during employment, the situation is even worse—the guestworker would have to either accept the policy or depart the country as their visa is valid for their current employer only and movement to other employment would be extremely difficult.181 At these late stages, the alleged consent is achieved through coercion.
Underlying concerns about consent is the power imbalance between employers and their middle and low-wage employees. The Dunlop Commission on the Future of Worker-Management Relations recognized this problem, writing in its 1994 report (hereinafter “Dunlop Report”):
We remain very concerned about the potential for abuse of [alternative dispute resolution (“ADR”), including arbitration,] created by the imbalance of power between employer and employee, and the resulting unfairness to employees who, voluntarily or otherwise, submit their disputes to ADR. These concerns are obvious if the process is controlled unilaterally by employers, such as when employees are required to sign mandatory arbitration clauses as a condition of employment[.]182
This is precisely the situation guestworkers will find themselves in should their employers require them to submit to mandatory arbitration.
Individual guestworkers lack bargaining power. There are many more guestworkers seeking employment than employment opportunities. USDOL recognized this lack of bargaining power when it promulgated regulations prohibiting waiver of guestworkers’ rights in the absence of private litigation or an administrative enforcement action.183 If an employer chooses to require mandatory arbitration, the guestworker has no meaningful option but to accept it or risk the possibility of foregoing any employment at all; the absence of alternatives results in a bargaining failure.184
Proponents hold out arbitration as more efficient and readily accessible than litigation.185 It is portrayed as the faster alternative. However, there are reasons to doubt this assertion.186 A 2011 study by Alexander Colvin of AAA administered employment arbitrations found that the mean time to disposition was 361.5 days for arbitrations that resulted in an award and 284.4 days for arbitrations that settled prior to an award.187 While undoubtedly shorter than litigation, ten months to a year to complete arbitration is hardly a quick resolution.188 And, when the parties litigate the existence or enforceability of an arbitration agreement prior to arbitration, the time required increases dramatically.
C. The Affordable Alternative Myth
Some argue that arbitration is less expensive than litigation and that employers’ cost-savings may be passed on to consumers and employees in lower costs and higher wages.189 Whether arbitration is indeed less costly than litigation is disputed and there is no evidence that arbitration cost-savings are passed on by employers.190 Even experienced employment defense attorneys acknowledge that arbitration, when contested, may be as expensive and time consuming as litigation.191
As in court, there are filing fees for arbitrations.192 In addition, unlike a judge, the arbitrator charges fees for time spent on a case.193 Arbitration filing and arbitrator fees far exceed court filing fees and can be thousands of dollars.194 Parties must still bear other costs as well, including their own attorneys’ fees and expenses related to discovery. Of particular importance to guestworkers who may not speak English or may wish to submit evidence in a language other than English is the cost of interpretation. Under AAA rules, for example, the party that requires interpretation must pay for the expenses associated with it.195 This differs from many courts’ practices and could add substantial costs for the limited English proficient guestworker.196
Arbitration advocates praise arbitration as simpler than litigation and thus more accessible to pro se parties.197 Some allege that the relative simplicity of arbitration also makes it is easier for employees to find attorneys to represent them or, in the absence of an attorney, to represent themselves. Some scholars believe that, despite arbitration’s limitations, we should nonetheless accept it because the true choice is between arbitration and nothing—most middle and low-income employees cannot and will not find an attorney to represent them in litigation.198 However, there is little evidence to support this argument.199
This argument assumes that pro se employees are able to successfully represent themselves in arbitration or are more likely to find counsel to represent them in arbitration than litigation.200 There is no empirical evidence to support either position. A 2011 study found that 24.9% of employees represented themselves in employment arbitration and had a lower likelihood of success and were awarded lower damages than represented employees.201 In its guide to representing yourself in employment arbitration, the AAA cautions, “workplace disputes, especially those involving statutory claims such as race, age, or national origin discrimination, can be difficult to present without the assistance of an attorney. At a minimum, you should consider consulting with an attorney.”202 These are precisely the types of workplace disputes that guestworkers are likely to have.203
Arbitration fees also raise concerns about access to justice and fairness.204 Fees associated with employment arbitration, when shared by the employee and employer, may make arbitration cost-prohibitive for the low or middle-income employee.205 When borne solely by the employer, there are concerns about the actual or perceived bias of the arbitrator.206 Guestworkers will almost always be unable to pay fees associated with arbitration. However, if they were filing suit in court, they could seek to have filing fees waived. As most of the employment laws include fee-shifting provisions, private attorneys may be willing to represent the guestworker.207 Alternately, guestworkers may be represented by low or no-cost public interest or pro bono attorneys.
Arbitration advocates assure critics that the process is fair. However, in addition to the many issues raised above, the repeat player effect and the potential for biased, unqualified, or otherwise ineffective arbitrators raise serious concerns about fairness.208
The repeat player effect benefits a party that participates in a dispute resolution process multiple times. In employment arbitration, employers are much more likely to benefit from this phenomenon.209 One study found empirical support for this often cited concern, with employees winning just 16.9% of cases against repeat-player employers in comparison to 31.6% of cases against one-time employers and receiving substantially lower awards. The effect was exaggerated when an employer used the same arbitrator multiple times.210
Even when arbitrators are not biased, they may not have the knowledge or experience to properly apply the law or ensure a fair arbitration process.211 There are no mandatory minimum standards for arbitrators.212 While the leading arbitration organizations may have standards of their own, no uniform standard requires an arbitrator to be an attorney or have a law degree.
Guestworkers bring claims that raise complex issues, including claims under the FLSA, TVPA, civil Racketeer Influenced and Corrupt Organizations Act (“RICO”), Title VII, and various state laws. Current knowledge of these specialized areas of law—as well as an understanding of the guestworker visa program—is required to properly apply the law in arbitration. The arbitrator must also be confident and knowledgeable enough in these areas to withstand possible pressure and overreaching by employer’s counsel in an arbitration, particularly if the guestworker is unrepresented.
Reduction in court dockets should not be achieved by limiting court access for the most vulnerable litigants. As arbitration proponents correctly point out, mandatory arbitration has the potential to reduce demands on the judiciary by redirecting potential litigants to private arbitration. This creates space on court dockets to more expeditiously hear other cases and could conceivably lead to reduced taxpayer expenses. However, compelled arbitration is not the only way to shrink court dockets. A $15,000 filing fee would also reduce demands on the judiciary yet that barrier to justice is hopefully unacceptable to most. Indeed, reducing court dockets of valid claims may not be a desirable goal. There are numerous ways to reduce demands on the judiciary that neither limit access to justice nor hinder enforcement of the law. For example, improved employer compliance with workplace laws would decrease court dockets while increasing fair competition among employers and improving working conditions.F.
Many arbitration proponents say there is no meaningful difference between the outcomes parties achieve through arbitration and litigation. Some early studies purported to show equal or better outcomes for employees in arbitration, but those studies may suffer from the lack of substantial and complete data and a focus on high-salary earners.213 However, the most recent and relatively comprehensive study found that, in comparison to court trials, the employee win rate was lower (21.4%) and the award amount was “substantially lower” (a median of $36,500 and mean of $109,858 for awards to successful employees).214 The study found that median awards in available employment litigation studies were between five and ten times greater than those in arbitration.215 In fact, the Supreme Court itself has acknowledged in dicta that the choice between arbitration and litigation can determine the outcome in a case.216 The reasons provided by the Court included the loss of the right to trial by jury, arbitrators’ lack of “the benefit of judicial instruction on the law”, the absence of reasoned opinions, and the limited record and review of arbitral awards.217
Regardless of whether or why employees fare worse in arbitration, the widespread perception is that they do. As a result, arbitration diminishes the value of employees’ valid claims. Employees are likely to secure lower settlement offers if employers and their counsel believe the employer faces less risk of liability in arbitration.218 As arbitration proceedings and outcomes are usually private, employers face less potentially damaging public exposure, another consideration that might reduce offers for settlement of valid claims.
V. Consequences of Mandating Arbitration for Guestworkers
By allowing employers to impose mandatory arbitration on guestworkers, the federal government would permit harmful consequences for guestworkers, U.S. workers, and law-abiding employers. It would ensure our economy increasingly relies on a readily-replaceable underclass of foreign workers who have diminished workplace rights and no meaningful public oversight over their working and living conditions.
A. Consequences for Guestworkers
The U.S. government should protect guestworkers. The government created and now implements and oversees the guestworker visa program. It would be inequitable to invite foreign citizens to lawfully enter the country to meet the labor needs of U.S. employers and then permit those individuals to be barred from accessing the full protections of U.S. laws and courts. The government encourages and accepts the benefits of guestworkers’ labor and, as a result, should ensure their wellbeing and lawful treatment.219 Permitting employer-mandated arbitration would be a violation of that obligation.220
While not a legally-binding obligation, the U.S. government arguably owes a duty to guestworkers because the very structure of the visa programs is a significant source of guestworkers’ heightened risk of abuse.221 Lack of visa portability has been repeatedly cited as one of the central reasons for guestworkers’ vulnerability to abuse.222 Because the design of the guestworker visa programs is one of the primary causes of guestworkers’ vulnerability, the government has a moral, if not legal, obligation to ensure their rights are protected and enforced. One way to provide oversight and monitor working conditions is through the public hearing and resolution of guestworkers’ legal claims in court.
Given its interest in ensuring uniform compliance with workplace protections and, at a minimum, its moral obligation to guestworkers, the government should prohibit the use and enforcement of mandatory arbitration agreements. Failure to do so causes harm to guestworkers and subjects them to the arbitration problems detailed in Part IV, as well as reduced procedural protections and remedies, possible waiver of statutory rights, and insufficient protection from retaliation. Each of these concerns is described below.
1. Limited Procedural Protections and Remedies
Arbitration and arbitration agreements can profoundly limit would-be litigants’ access to beneficial procedural protections. Limits include shortened statutes of limitations,223 reduced scope and amount of discovery,224 loss of the constitutional right to a jury trial,225 and restricted remedies,226 including prohibitions on punitive damages. These limits can profoundly impact the outcome of arbitration, particularly for low-wage guestworkers.227
Guestworkers already face such tremendous barriers to enforcing their rights that they should not be subject to any additional limitations. For example, guestworkers who have returned to their country of origin as required by their visas may have difficulty appearing at hearings or depositions and participating in discovery.228 Arbitration presents additional barriers and much less certainty about whether the arbitrator will make accommodations to ensure the guestworker can participate in the matter. For example, the AAA’s policy for determining the locale of an employment arbitration permits for the input of the parties.229 However, if there is disagreement, the arbitrator makes a final and binding determination.230 In one case, the employee—a seamen from a foreign country—could not afford to travel to another country to participate in arbitration or to hire an attorney.231 Despite this, the court found the agreement enforceable.232
The ability to participate in a class action lawsuit is critical to enforcing the rights of guestworkers. The substantial financial liability employers face in class actions also creates incentives to comply with employment law.233 However, class action waivers contained in mandatory arbitration clauses have been found enforceable by the Supreme Court.234 Loss of the ability to aggregate claims is especially troubling for guestworkers. Due to the economic considerations of private attorneys and the limited resources of free lawyers, guestworkers’ claims may not go forward individually.235 In addition, workers fearful of retaliation may be comfortable participating in a class action but not initiating an action of their own.236
One of the largest wage and hour settlements reported in 2013 was a class action brought by guestworkers from India.237 The average settlement amount per class member was approximately $1,600.238 Had this not been a class action, it is highly unlikely that the employees involved would have been able to secure an attorney to represent them or would have recovered as much as they did. Although the action took nearly seven years to resolve, it was still more efficient than individual actions, including arbitrations, brought by hundreds of employees.
Another class action, brought by the Equal Employment Opportunity Commission (“EEOC”) on behalf of H-2A guestworkers from Thailand, resulted in a consent decree that required the employer company to take specific steps to ensure its labor contractors complied with federal anti-discrimination laws and to submit to annual audits.239 Future employees will benefit from the advocacy on behalf of this class of guestworkers. Without the risk of financial liability associated with a class action, it is unlikely that the employers would have agreed to such meaningful injunctive relief.240
2. De Facto Waiver of Statutory Rights
Mandatory arbitration agreements create the troubling possibility of functioning as de facto waivers of statutory rights.241 Waiver of guestworkers’ workplace rights may occur when guestworkers have valid claims against their employers but are unable to participate in arbitration and thus cannot enforce the rights. For example, they may not be able to participate because they have returned to their country of origin, cannot communicate in English, or do not have the necessary access to internet, fax machines, and email; cannot afford to participate in the arbitration; statutorily-mandated remedies are restricted; or the law is improperly applied by the arbitrator to the benefit of the employer. Although some of these challenges could occur in judicial litigation, in that setting, procedural and legal safeguards are in place to limit their impacts and a public process encourages accountability.
Guestworkers need enforceable workplace rights and meaningful remedies when their rights are violated. While waiver of statutory rights is a troubling prospect for any employee, guestworkers’ already substantial vulnerability is enhanced when their access to judicial remedies and procedures is limited and, thus, places them outside the protections of the law. Employers may believe they can act with impunity towards guestworkers because they have no meaningful remedies. When a population’s access to the courts and legal redress are consistently limited, impacted individuals may feel powerless, bad actors are empowered to act with impunity, and a culture of non-compliance prevails.242
3. Inadequate Protection from Retaliation
Those who take legal action, individually or collectively, to protect their rights may experience threats and other forms of retaliation.243 Vulnerable employees need meaningful and timely protection from retaliation. Low-wage workers are vulnerable to retaliation.244 Guestworkers are even more so.245 Guestworkers risk retaliation in the U.S. and at home. When threats are from outside of the U.S., they can be particularly disturbing, including threats to harm family members or blacklist an entire community from future employment.246
Judges have the authority to respond to retaliation and immediately intervene, order a party to cease unlawful conduct, and hold the party in contempt if it fails to do so. Employers may face criminal contempt and even jail time if they do not cease their retaliatory conduct.247 If the judge assigned to a case is unavailable, a duty judge can handle emergencies.248 In contrast, arbitrators do not have the power of contempt. As a result, parties may be less likely to comply and, in the event of noncompliance, there is no means for immediate intervention and serious consequences.249 Arbitrators’ orders are not self-enforcing. Consequently, when a party receives a favorable ruling and the other party fails to comply, the prevailing party must apply to the court to have the ruling made an enforceable order.250 This highlights the arbitrator’s inability to provide meaningful protection to guestworkers who face retaliation for enforcing their workplace rights. Some arbitration organizations’ rules provide for the possibility of emergency court intervention, or interim measures, during an arbitration.251 However employees seeking protection would have to initiate a separate legal action in court and the judge handling the matter would be entirely unfamiliar with the underlying issues and dynamics involved.
The lack of judicial formality and courtroom security measures may result in intimidation of claimants.252 Guestworkers threatened with harm in the past, or who are generally fearful of their former employers or supervisors, may be intimidated in the informal conference room setting. Of course, there is also the possibility that the more informal setting may be more comfortable than a courtroom for others.253
In addition to limited procedural protections and remedies, de facto waiver of statutory rights, and inadequate protection from retaliation, another harmful consequence of mandating arbitration for guestworkers is that extremely narrow judicial review of arbitral awards leaves little opportunity to correct misapplications of the law and procedural irregularities.254 The FAA permits a district court to vacate, modify, or correct an arbitration award only in very limited circumstances—for example, when there is evidence of fraud or arbitrator corruption.255 Some courts have vacated arbitration agreements when the arbitrator had showed a “manifest disregard” for the law.256 However, even this narrow basis for judicial review has now been called into question and circuit courts have split on whether manifest disregard is still a basis for vacatur.257 What remains clear is that a party must clear “a high hurdle” and “it is not enough for the party to show that the panel committed an error, or even a serious error.”258 Guestworkers cannot rely on the courts to protect their rights when the law is incorrectly applied in an arbitration or there are concerns about the fairness of the arbitration process or outcome. A more reliable approach is needed.
Arbitrations are also often not recorded or transcribed, resulting in a limited record in the event that there is judicial review. The withdrawal of any judicial oversight of guestworkers’ employment renders guestworkers more vulnerable to abuse and to arbitrator error, bias, and misconduct.259
B. Consequences for U.S. Workers, Employers, and Public
If the government fails to meet its obligation to guestworkers by permitting employers to impose mandatory arbitration, there will be harmful consequences for U.S. workers, law-abiding employers, and the public.
The private nature of arbitration limits the effectiveness of workplace laws and acts against Congress’ intent in passing them. Workplace laws are intended to benefit all employees and ensure an even playing field for employers.260 Public laws demand a public process. Arbitration drastically limits the information that is available to the public, including consumers, the press, legislature, enforcement agencies, and courts.
Legal actions regarding violations of workplace laws should result in public decisions. Legal proceedings and outcomes of cases brought by guestworkers against their employers should be publicly available. Civil suits brought by guestworkers have been a critical means to raise public awareness about potential issues in the guestworker visa programs.261
Courts have long recognized the public’s need to know the outcomes of cases and are reluctant to file documents under seal. Indeed, courts have refused to approve FLSA settlements that include confidentiality provisions or to file proposed settlements of workplace claims under seal because of the public’s interest in the proceedings and outcomes.262 Public decisions permit the public and legislature to monitor issues of critical public importance and can lead to investigations and policy change.263 Public decisions also permit identification and monitoring of ongoing and systematic, willful, and intentional violations of the law by specific actors, such as patterns of workplace discrimination.264 The public nature of litigation may also encourage employers to comply with the law in order to avoid negative publicity that might harm their business or reputation.265 A transparent dispute resolution process also builds participant and public confidence in the process and helps ensure the process is fair.266
Relegating disputes to arbitration results in underdeveloped legal doctrine.267 In employment law, a paucity of legal doctrine could increase uncertainty for both employers and employees—one of the harms pre-dispute arbitration seeks to avoid.268 Further uncertainty is caused by arbitrators’ broad range of views, experiences, and ability to enforce the law.
Finally, the private nature of arbitration awards diminishes any deterrent effect that large, publicized awards might have.269 Although employers may be encouraged to comply with the law by reports of large awards for guestworkers whose rights were violated, unpublished private awards have little to no impact. As a result, employers will have little to discourage them from acting with impunity towards guestworkers.
Failure to enforce U.S. employment protections diminishes working conditions for all workers and thus undermines the purpose of the employment laws.270 For example, the federal overtime law requiring employees to be paid at a rate of one and a half times their regular rate of pay for all hours worked over forty in a workweek was intended, in part, to decrease unemployment by creating an incentive for employers to hire multiple employees rather than a single employee to work long hours.271 If the overtime requirements of the FLSA are not applied to guestworkers, work will not be spread among the working population as Congress intended.
Private suits are critical to ensuring compliance with U.S. employment requirements and benefit the entire workforce.272 Lawsuits brought by individuals are an important way to enforce labor and employment protections for all, in addition to vindicating individual rights.273 These private attorney general suits not only help to ensure the rights of the aggrieved worker are protected, but also help to achieve general compliance. Ensuring private attorney general suits can be brought is particularly critical given the insufficient government enforcement resources available.274
3. Perverse Incentive to Hire Guestworkers
To the extent that mandatory arbitration agreements act as de facto waivers of guestworkers’ workplace rights or limit the remedies they can recover when their rights are violated, a growing portion of the working population will be outside of the protections of the law. This creates a perverse incentive to hire guestworkers rather than U.S. workers.275
Although guestworkers are not intended to displace U.S. workers, numerous concerns have been raised about employment of guestworkers in jobs that could have been filled by local workers.276 The U.S. has a stated interest in encouraging employers to hire available U.S. workers rather than guestworkers.277 There has already been discrimination against U.S. workers who are systematically discouraged from seeking or accepting employment and face disparate treatment once employed.278 Ensuring that guestworkers have access to the courts may be one way to encourage employers to truly try to identify U.S. workers before resorting to employment of guestworkers. Failure to do so could inadvertently cause some employers to hire guestworkers—who may be perceived as cheaper and more readily abused—over available U.S. workers.
When a portion of the working population is held outside of the protections of the law, it creates a perverse incentive for employers to hire those excluded workers in lieu of protected workers.279 Courts and USDOL have recognized this problem in relation to undocumented workers.280 Numerous courts and agencies have stated that wage and hour laws requiring workers be paid a minimum wage and overtime wages must be applied to employees who lack work authorization, because failure to do so would encourage employers to hire more undocumented employees.281 When employers are required to comply with the law equally without regard for an employee’s immigration status, employers’ incentives to favor guestworkers over U.S. workers diminish and compliance with the law increases.
4. Unfair Competition for Employers
Permitting a contractual provision that encourages employers of guestworkers to avoid employment law requirements creates an unfair disadvantage for employers who comply with the law.282 If bad actor employers perceive that they need not follow the law, for example, they may pay sub-minimum wages while their law-abiding counterparts pay all required wages when due.
VI. Legislative Recommendations
The U.S. government should not permit guestworkers to be compelled to submit to arbitration. Unfortunately, many courts are all too willing to enforce arbitration agreements and future legislation condoning guestworker arbitration would reduce the judiciary’s already limited oversight.283
Current approaches to limit mandatory arbitration agreements are insufficient. While advocates have had remarkable recent success keeping mandatory arbitration clauses out of H-2A guestworkers’ employment contracts for the past several years,284 the approach will only work so long as there is a receptive administration and mandatory arbitration does not become more widely required in agricultural employment.
If a guestworker is presented with a mandatory arbitration clause in their employment contract or subsequently, they can in theory decline to enter into it or leave the employment relationship. However, this is entirely unrealistic in the context of low-wage guestworkers.
Once a dispute emerges, guestworkers and their advocates can try to limit enforcement of mandatory arbitration clauses on a case-by-case basis. Guestworkers who choose to file a lawsuit in court can try to make a variety of challenges. They can challenge the existence of an enforceable contractual commitment to arbitrate, argue the provision is unenforceable using state contract law arguments, such as unconscionability, fraud, or duress, or by claiming it violates the visa program regulation that requires job requirements be “consistent with the normal and accepted qualifications and requirements” in the same occupation and area of employment.285 This last argument would require a survey or other evidence of the use of mandatory arbitration in the relevant region and industry and may be difficult information for guestworkers to access and prove.
Challenging enforcement of arbitration requirements on an individual basis is far from an ideal approach; it is available only to a few committed guestworkers with determined attorneys and, in many cases, unlikely to succeed. As described above, the mere presence of an arbitration clause in a contract could dissuade guestworkers from taking legal action and possibly attorneys from agreeing to represent them. Even if a guestworker proceeds with legal action in the face of a mandatory arbitration provision, courts have been so receptive to enforcing arbitration clauses that this approach is unlikely to be consistently successful. It also requires guestworkers to secure an attorney and for the attorney and their guestworker client to challenge the arbitration provision rather than just initiating arbitration. Given courts’ overwhelming enforcement of arbitration provisions, most guestworkers and their attorneys are unlikely to risk expending very limited resources to challenge an arbitration provision in court.
Individual adjudication regarding enforceability of arbitration is an uncertain, resource-intensive strategy that will likely fail in most instances. Rather than resolving issues surrounding the enforcement of arbitration clauses, courts should expend their resources on the underlying substantive claims.
A clear prohibition against imposing mandatory arbitration on guestworkers will create more certainty for guestworkers and their employers than piecemeal privately-initiated litigation challenging the enforcement of arbitration agreements. It will also save resources as parties will not have to expend public and private resources litigating whether the mandatory arbitration clause is indeed enforceable in the first place.
A preferable approach is passage of a federal statute that prohibits pre-dispute mandatory arbitration for guestworkers.286 The guestworker program is a federally-created and administered program, the federal government has plenary power over immigration, and the FAA preempts most state efforts to curtail the use of arbitration. State laws limiting use and enforcement of arbitration clauses are likely to be preempted.287 A federal statute will also ameliorate any concerns about the possible applicability of the New York Convention.288
Most of the desired reforms could be achieved through passage of the Arbitration Fairness Act of 2015.289 The proposed legislation would amend the FAA to invalidate pre-dispute arbitration agreements in employment, consumer, antitrust, and civil rights matters.290 It would also ensure that a judge, not an arbitrator, would apply federal law to decide issues regarding the arbitrability of a claim.291
In the absence of such sweeping reforms, Congress should prohibit mandated arbitration in employment disputes involving guestworkers. There is precedent for statutorily excluding categories of workers and workplace claims from mandatory arbitration.292 For example, defense contractors may not require their employees to arbitrate workplace discrimination or tort claims arising from sexual assault or harassment.293 More recently, bipartisan legislation was introduced that would prohibit mandatory arbitration of Uniformed Services Employment and Reemployment Rights Act (“USERRA”) claims.294 For the many reasons provided in Part II.B infra, guestworkers are also an appropriate category of workers to exclude from mandatory arbitration.
The U.S. government should not compel guestworkers to submit to arbitration nor endorse employer efforts to do so. Rather, any reforms to the existing guestworker program should clarify that guestworkers may not waive their right to access U.S. courts and that pre-dispute arbitration agreements are unenforceable. In addition to mandatory arbitration clauses, any other limits on guestworkers’ substantive or procedural rights should be made unenforceable, including other forms of forum selection clauses, foreign choice of law provisions, and class action waivers.
Rather than prohibit arbitration or enforcement of pre-dispute arbitration agreements altogether, some advocate trying to improve arbitration.295 Among the early recommendations to ensure some due process protections for employees were the Dunlop Report296 and subsequent American Bar Association’s Due Process Protocol for Mediation and Arbitration of Statutory Disputes Arising Out of the Employment Relationship (hereinafter “Employment Protocol”).297
The Dunlop Report recommended that all arbitration of workplace disputes involving statutory claims meet reasonable, minimal quality standards:
[1] [a] neutral arbitrator who knows the laws in question and understands the concerns of the parties; [2] a fair and simple method by which the employee can secure the necessary information to present his or her claim; [3] a fair method of cost-sharing between the employer and employee to ensure affordable access to the system for all employees; [4] the right to independent representation if the employee wants it; [5] a range of remedies equal to those available through litigation; [6] a written opinion by the arbitrator explaining the rationale for the result; and [7] sufficient judicial review to ensure that the result is consistent with governing laws.298
The Employment Protocol similarly recommended employees be permitted to select the representative of their choice, that parties share fees except where economically impossible, that employers reimburse a portion of employee’s legal fees, and that the arbitrator have authority to award fees.299 It further recommended “adequate but limited” pre-trial discovery, including “necessary” depositions and access to “reasonably relevant” information.300 To address concerns regarding bias, it recommended an arbitrator selection process involving an arbitration agency and an arbitrator duty to disclose actual or perceived conflicts of interest.301 To ensure adequately skilled arbitrators, it recommended use of unbiased arbitrators experienced in employment law and trained in arbitration.302 The Employment Protocol also included a recommendation that contact information for parties involved in all prospective arbitrators’ most recent arbitrations be made available and that arbitrators issue a written opinion and award.303 Notably, the Task Force that drafted the Employment Protocol could not agree on whether employers should be permitted to require pre-dispute arbitration agreements.304 In contrast to the Dunlop Report, the Employment Protocol suggested the arbitrator’s award be “final and binding and the scope of review . . . limited.”305
Subsequent recommendations have been based on similar proposals designed to promote fairness in the arbitration process that include increased judicial review and more protective standards.306 Some reformers recommend that arbitration be permitted only when agreed to after a dispute arises, not as a condition of employment.307 These recommendations have not generally been adopted, and courts continue to widely sanction arbitration without any of these basic safeguards.
Proposed modifications to arbitration, while potentially helpful, fail to address the full range of serious concerns about mandatory arbitration and the specific issues raised by the prospect of imposing mandatory arbitration on low-wage guestworkers. These include profound power and information imbalances, the absence of oversight, and a lack of enforcement mechanisms when problems arise.308 Partial reforms risk giving the impression of fairness without actually providing meaningful due process protections and addressing other serious concerns.
While post-dispute arbitration agreements address some of the most troubling concerns regarding coercion, post-arbitration agreements do not protect guestworkers from numerous other concerns about arbitration. For example, post-dispute agreements do nothing to address guestworkers’ need for counsel, the risk of arbitrator bias, limited protections and remedies, and the consequences of private proceedings. While post-dispute arbitration is theoretically more fair, parties are unlikely to agree to it. Employers will refuse to settle smaller claims in the hopes that the employee will not have the means to file a lawsuit and, in cases with larger claims, employees will be more likely to successfully secure legal representation and opt to litigate.309 Thus, post-dispute arbitration agreements are not a practical alternative.310
Of course, litigation is not a panacea.311 Bias in the courts, fear of retaliation, the costs and time required to participate in litigation, and guestworkers’ difficulty finding representation all still present challenges, not to mention the inadequacy of existing legal protections and remedies. Litigation also has the potential to undermine organizing efforts and other more empowering approaches to long-term meaningful change for guestworkers and other low-wage workers.312 However, access to the courts remains a critical tool for ensuring safe, just, and fair workplaces for both U.S. and foreign workers.313 Some scholars suggest that civil litigation also offers the possibility of empowering guestworkers, providing opportunities for storytelling and narrative-shifting, and ultimately inspiring policy change.314
Guestworkers’ unique vulnerability—particularly the vulnerability caused by the very structure of the guestworker visa program—demands that the legislature and judiciary ensure them adequate protections. The federal government controls the visa program that puts guestworkers at risk of workplace abuse and has plenary power to change it; thus, the federal government has an obligation to monitor guestworkers’ experiences and ensure their workplace rights are protected. Guestworkers face such tremendous barriers to enforcing their rights that the government cannot permit employers to impose additional barriers to justice, procedural or otherwise. Guestworkers must be able to seek redress in all available forums that have jurisdiction over the parties and their claims. Failure to ensure full access to the courts and protections of the law would be a breach of the government’s responsibility to guestworkers and a detriment to guestworkers, U.S. workers, and the public.