"Yellow Dog Contracts" - 21Century Indentured Servitude

This month, the Equal Employment Opportunity Commission (EEOC) announced that it is suing a regional restaurant group that owns a number of fast-food franchises, including Applebee’s, Panera Bread and Chevy’s, because the group requires all of its employees and applicants to sign a “forced arbitration” clause as a condition of employment – that is, if these employees want to work in the group’s restaurants, they must sign away their right to hold their employer accountable in court for violating state or federal employment laws.

The EEOC’s efforts are admirable, but they address a tiny portion of a much bigger problem.  These hidden forced arbitration clauses lurk behind many of the most brutal injustices facing consumers and workers.  For example, a court in Texas recently held that a woman who washed dishes at a fast food restaurant could not sue in court for damages from personal injuries she sustained on the job.  The problem had nothing to do with her argument that she’d been treated unfairly; the problem was that her employee handbook had contained a forced arbitration agreement that dictated that her claims were to be decided by a private arbitrator.

We’ve faced problems like this before. In the early 20th century, American corporations frequently required their workers to agree not to join together in a union to seek higher wages or better working conditions.  The choice wasn’t whether or not to waive your rights, but whether you wanted a job — and that wasn’t much of a choice at all. Commentators at the time referred to these agreements as “yellow-dog contracts,” because they “reduced to the level of a yellow dog” every person forced to sign them.  The contracts were not the result of free and equal bargaining between workers and their employers.   Rather, they effectively forced employees to sell themselves into indentured servitude.   With the Norris-LaGuardia Act, Congress preserved workers’ dignity and restored the freedom to contract.

Recently, a series of Supreme Court decisions have made forced arbitration agreements a new kind of “yellow dog contract.” Buried in the terms and conditions of cellphone contracts, credit agreements, school enrollment forms, nursing home contracts and employment contracts in non-union workplaces, forced arbitration clauses require consumers and employees to give up their constitutional right to a jury of their peers as a condition of keeping their job or buying goods from a company.

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