[House Hearing, 117 Congress]
[From the U.S. Government Publishing Office]


                     CLOSING THE COURTHOUSE DOORS:
                        THE INJUSTICE OF FORCED
                         ARBITRATION AGREEMENTS

=======================================================================
                                 HEARING

                               BEFORE THE

                            SUBCOMMITTEE ON
                          HEALTH, EMPLOYMENT,
                          LABOR, AND PENSIONS

                                OF THE

                    COMMITTEE ON EDUCATION AND LABOR
                     U.S. HOUSE OF REPRESENTATIVES

                    ONE HUNDRED SEVENTEENTH CONGRESS

                             FIRST SESSION

                               __________

         HEARING HELD IN WASHINGTON, DC, NOVEMBER 4, 2021

                               __________

                           Serial No. 117-34

                               __________

      Printed for the use of the Committee on Education and Labor
      
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]      

          Available via: edlabor.house.gov or www.govinfo.gov
                               __________
                               

                    U.S. GOVERNMENT PUBLISHING OFFICE                    
46-030                    WASHINGTON : 2022                     
          
-----------------------------------------------------------------------------------                                 

                    COMMITTEE ON EDUCATION AND LABOR

             ROBERT C. ``BOBBY'' SCOTT, Virginia, Chairman

RAUL M. GRIJALVA, Arizona            VIRGINIA FOXX, North Carolina,
JOE COURTNEY, Connecticut              Ranking Member
GREGORIO KILILI CAMACHO SABLAN,      JOE WILSON, South Carolina
  Northern Mariana Islands           GLENN THOMPSON, Pennsylvania
FREDERICA S. WILSON, Florida         TIM WALBERG, Michigan
SUZANNE BONAMICI, Oregon             GLENN GROTHMAN, Wisconsin
MARK TAKANO, California              ELISE M. STEFANIK, New York
ALMA S. ADAMS, North Carolina        RICK W. ALLEN, Georgia
MARK DeSAULNIER, California          JIM BANKS, Indiana
DONALD NORCROSS, New Jersey          JAMES COMER, Kentucky
PRAMILA JAYAPAL, Washington          RUSS FULCHER, Idaho
JOSEPH D. MORELLE, New York          FRED KELLER, Pennsylvania
SUSAN WILD, Pennsylvania             GREGORY F. MURPHY, North Carolina
LUCY McBATH, Georgia                 MARIANNETTE MILLER-MEEKS, Iowa
JAHANA HAYES, Connecticut            BURGESS OWENS, Utah
ANDY LEVIN, Michigan                 BOB GOOD, Virginia
ILHAN OMAR, Minnesota                LISA C. McCLAIN, Michigan
HALEY M. STEVENS, Michigan           DIANA HARSHBARGER, Tennessee
TERESA LEGER FERNANDEZ, New Mexico   MARY E. MILLER, Illinois
MONDAIRE JONES, New York             VICTORIA SPARTZ, Indiana
KATHY E. MANNING, North Carolina     SCOTT FITZGERALD, Wisconsin
FRANK J. MRVAN, Indiana              MADISON CAWTHORN, North Carolina
JAMAAL BOWMAN, New York, Vice-Chair  MICHELLE STEEL, California
MARK POCAN, Wisconsin                JULIA LETLOW, Louisiana
JOAQUIN CASTRO, Texas                Vacancy
MIKIE SHERRILL, New Jersey
JOHN A. YARMUTH, Kentucky
ADRIANO ESPAILLAT, New York
KWEISI MFUME, Maryland

                   Veronique Pluviose, Staff Director
                  Cyrus Artz, Minority Staff Director
                                 ------                                

        SUBCOMMITTEE ON HEALTH, EMPLOYMENT, LABOR, AND PENSIONS

                 MARK De SAULNIER, California, Chairman

JOE COURTNEY, Connecticut            RICK W. ALLEN, Georgia
DONALD NORCROSS, New Jersey            Ranking Member
JOSEPH D. MORELLE, New York          JOE WILSON, South Carolina
SUSAN WILD, Pennsylvania             TIM WALBERG, Michigan
LUCY McBATH, Georgia                 JIM BANKS, Indiana
ANDY LEVIN, Michigan                 DIANA HARSHBARGER, Tennessee
HALEY M. STEVENS, Michigan           MARY E. MILLER, Illinois
FRANK J. MRVAN, Indiana              SCOTT FITZGERALD, Wisconsin
ROBERT C. ``BOBBY'' SCOTT, Virginia  VIRGINIA FOXX, North Carolina
  (ex officio)                         (ex officio)
                            
                            
                            C O N T E N T S

                              ----------                              
                                                                   Page

Hearing held on November 4, 2021.................................     1

Statement of Members:
    DeSaulnier, Hon. Mark, Chairman, Subcommittee on Health, 
      Employment, Labor, and Pensions............................     1
        Prepared statement of....................................     3
    Allen, Hon. Rick, Ranking Member, Subcommittee on Health, 
      Employment, Labor, and Pensions............................     5
        Prepared statement of....................................     6

Statement of Witnesses:
    Colvin, Alexander, JD, Ph.D., Kenneth F. Kahn 1969 Dean, 
      School of Industrial and Labor Relations,Cornell University     8
        Prepared statement of....................................     9
    King, Roger, Senior Labor and Employment Counsel, H.R. Policy 
      Association................................................    25
        Prepared statement of....................................    28
    Kotagal, Kalpana, JD, Partner, Cohen Milstein Sellers & Toll 
      PLLC.......................................................    54
        Prepared statement of....................................    56
    Perez, Glenda, Former Implementation Set-Up Representative, 
      CIGNA......................................................    20
        Prepared statement of....................................    22

Additional Submissions:
    Mr. Allen:
        Statement for the record from David Sherwyn..............    87
        Letter dated November 17, 2021 from the U.S. Chamber of 
          Commerce...............................................    92
        ``Fairer, Faster, Better: An Empirical Assessment of 
          Employment Arbitration,'' ndp analytics, May 2019......    94
        Letter dated November 3, 2021 from ndp analytics.........   116
    Questions submitted for the record by:
        Norcross, Hon. Donald, a Representative in Congress from 
          the State of New Jersey
        McBath, Hon. Lucy, a Representative in Congress from the 
          State of Georgia 
        Levin, Hon. Andy, a Representative in Congress from the 
          State of Michigan

    Response to question submitted for the record by:
        Mr. Colvin...............................................   122
        Ms. Kotagal..............................................   127

 
                     CLOSING THE COURTHOUSE DOORS:
                        THE INJUSTICE OF FORCED
                         ARBITRATION AGREEMENTS

                              ----------                              


                       Thursday, November 4, 2021

                  House of Representatives,
                Subcommittee on Health, Employment,
                               Labor, and Pensions,
                          Committee on Education and Labor,
                                                    Washington, DC.
    The Subcommittee met, pursuant to notice, at 10:17 a.m., 
via Zoom, Hon. Mark DeSaulnier (Chairman of the Subcommittee) 
presiding.
    Present: Representatives DeSaulnier, Norcross, Wild, Mrvan, 
Allen, Walberg, Banks, Harshbarger, Miller, Fitzgerald, and 
Foxx (ex officio).
    Staff present: Kyle deCant, Labor Policy Counsel; Christian 
Haines, General Counsel; Rasheedah Hasan, Chief Clerk; Sheila 
Havenner, Director of Information Technology; Eli Hovland, 
Policy Associate; Ariel Jona, Policy Associate; Andre Lindsay, 
Policy Associate; Richard Miller, Director of Labor Policy; Max 
Moore, Staff Assistant; Mariah Mowbray, Clerk/Special Assistant 
to the Staff Director; Kayla Pennebecker, Staff Assistant; 
Jessica Schieder, Economic Policy Advisor; Banyon Vassar, 
Deputy Director of Information Technology; Cyrus Artz, Minority 
Staff Director; Michael Davis, Minority Operations Assistant; 
Rob Green, Minority Director of Workforce Policy; Georgie 
Littlefair, Minority Legislative Assistant; John Martin, 
Minority Deputy Director of Workforce Policy/Counsel; Hannah 
Matesic, Minority Director of Member Services and Coalitions; 
and John Witherspoon, Minority Professional Staff Member.
    Chairman DeSaulnier. Good morning, everyone. We are ready 
to begin. I will count down from five, and then we will start. 
Five, four, three, two, one. The Subcommittee on Health, 
Employment, Labor, and Pensions will come to order.
    Welcome everyone. I note that a quorum is present. The 
Subcommittee is meeting today to hear testimony on ``Closing 
the Courthouse Doors: The Injustice of Forced Arbitration 
Agreements.'' This is an entirely remote hearing and as such 
the Committee's hearing room is officially closed. All 
microphones will be kept muted as a general rule to avoid 
unnecessary background noise.
    Members and witnesses will be responsible for unmuting 
themselves when they are recognized to speak or when they wish 
to seek recognition. If a Member or witness experiences 
technical difficulties during the hearing please stay connected 
on the platform, make sure you are muted, and use your phone to 
immediately call the Committee's IT director whose number was 
provided in advance. Should the Chair experience technical 
difficulty, or need to step away, another majority Member is 
hereby authorized to assume the gavel in the Chair's absence.
    In order to ensure that the Committee's five-minute rule is 
adhered to, staff will be keeping track of time using the 
Committee's digital timer, which appears in its own thumbnail 
picture. Members and witnesses are asked to wrap up promptly 
when their time has expired, please.
    Pursuant to Rule 8(c) opening statements are limited to the 
Chair and Ranking Member. I'll now recognize myself now for the 
purpose of making my opening statement. Today we meet to 
discuss employers use of forced arbitration agreements and 
collective action waivers, and how these arrangements affect 
workers' ability to secure fair treatment.
    On their first day of work employees flip through a stack 
of papers, click a series of modules, and sign the terms and 
conditions of their contract. Even before their first day 
employees often skim through a dense job application. More 
often than not, these documents include an arbitration clause.
    In the fine print it states that an employee cannot take 
the employer to Court. Instead the employees must bring their 
claims to a closed-door meeting with an arbitrator who may not 
even have a law degree, and the employee will have no right to 
appeal the result.
    Workers who carefully review these agreements are forced to 
choose between signing or walking away from their job, but most 
of the time employees sign these clauses and do not realize 
until they have experienced workplace violations and seek 
justice. Unfortunately, over the last three decades employers 
have increasingly--some employers, have increasingly used 
forced arbitration clauses to circumvent workers' right to due 
process.
    In 1990, 2.1 percent of non-union employees got an 
arbitration clause in their employment contract, 2.1 percent in 
1990. As of 2018, nearly 60 percent of all non-unionized 
private sector employees were covered by forced arbitration 
agreements. Once again, in 1990, 2.1. In 2018, 18 years later, 
60 percent. That's 60 million American workers locked out of a 
courtroom and forced to go through a process that often is 
rigged against them.
    While proponents of forced arbitration describe it as more 
efficient litigating than in Court, we will hear from our 
witnesses today on how it is not efficient, and often time less 
efficient than normal litigation. When workers do enter into 
the arbitration process, they rarely emerge victorious.
    Research shows that employees have an overall win rate 
around 19 percent. And when an arbitrator is paired repeatedly 
with the same employer, that win rate reduces to nearly 11 
percent. In contrast, employees are more than 30 percent likely 
to win when they go to Federal Court.
    As a result, arbitration has become a tool of employers--
some employers--to evade accountability for violating their 
workers' rights. In the ten most populous states workers have 
eight million dollars stolen from them in minimum wage 
violations every year. This amounts to $3,300.00 in losses per 
worker every year. The Federal minimum wage is inadequate as it 
is, and without protections workers are left with even less 
while the employers line their pockets and duck litigation.
    Forced arbitration also makes it difficult for workers to 
seek justice when they experience discrimination. Arbitrations 
are private and allow the employers to be shielded from the 
court of public opinion. Additionally, the ordinary rules of 
discovery and evidence that come into the courtroom rarely 
apply, so employers can control the evidence that is brought 
into the room. These unfair practices allow employers to hide 
abuse while stacking the cards against workers who experience 
discrimination.
    In recent years the Supreme Court has only worsened the 
problem. In 2018 the Court's conservative majority ruled in the 
Epic Systems v. Lewis case, that an employer can even require 
employees to give up their right to join a joint, class, or 
collective action. This leads the employees to try their cases 
as individuals and prevents them from proving that their 
experience is one of many.
    Ultimately, this prevents employers from being held 
accountable. As Justice Ginsburg wrote in her dissent, 
``congressional correction of the Court's elevation of the FAA 
over workers' rights to act in concert is urgently in order.'' 
That's why today's hearing will focus on the Restoring Justice 
for Workers Act introduced by Chairs Nadler and Scott.
    First the legislation reopens the Courthouse doors for 
workers by prohibiting the use of forced arbitration clauses in 
employment contracts prior to dispute. Second, it reverses the 
Supreme Court's decision in Epic to ensure workers can ban 
together to hold unscrupulous employers accountable.
    And finally, it ensures that after an employment dispute 
arises, employers cannot obtain arbitration agreements by 
threat or coercion. I'd like to congratulate my colleagues on 
the Judiciary Committee for their efforts to advance the Forced 
Arbitration Injustice Repeal Act, or the FAIR Act, which ends 
forced arbitration in many other contexts.
    This legislation is crucial for empowering workers' rights 
under the statutes this Committee oversees. The Restoring 
Justice for Workers Act builds on the FAIR Act by including 
essential provisions like making collective action labors 
unfair labor practices under the National Labor Relations Act 
and preventing forced post dispute arbitration.
    If workers are shut out of the court system, they are not 
protected under the law. This is an outcome we should not 
accept. We cannot accept. I want to thank our witnesses for 
joining us today. I now yield to the distinguished Ranking 
Member Mr. Allen for purposes of him making his opening 
statements. Mr. Allen.
    [The statement of Chairman DeSaulnier follows:]

             Statement of Hon. Mark DeSaulnier, Chairman, 
        Subcommittee on Health, Employment, Labor, and Pensions

    Today, we meet to discuss employers' use of forced arbitration 
agreements and collective action waivers and how these arrangements 
affect workers' ability to secure fair treatment.
    On their first day of work, employees flip through a stack of 
papers or click a series of modules and sign the terms and conditions 
of their contract. Even before their first day, employees often skim 
through a dense job application. More often than not, these documents 
include an arbitration clause, hidden in the fine print, which states 
that the employee cannot take the employer to court. Instead, the 
employee must bring their claims to a closed-door meeting with an 
arbitrator who may not even have a law degree, and the employee will 
have no right to appeal the result.
    Workers who carefully review these agreements are forced to choose 
between signing or walking away from their job. But most of the time, 
employees sign these clauses and do not realize it until they have 
experienced workplace violations and seek justice.
    Unfortunately, over the last three decades, employers--some 
employers--have increasingly used forced arbitration clauses to 
circumvent workers' right to due process. In 1990, 2.1 percent of non-
union employees had an arbitration clause in their employment contract. 
2.1 percent in 1990. As of 2018, nearly 60 percent of all non-unionized 
private sector employees were covered by forced arbitration agreements. 
Once again, 1990 2.1 percent, 2018, 28 years later, 60 percent. That's 
60 million American workers locked out of the courtroom and forced to 
go through a process that is often rigged against them. While 
proponents of forced arbitration describe it as more efficient than 
litigating in court, we will hear from our witnesses today on how it is 
not efficient, and oftentimes less efficient than normal litigation.
    When workers do enter the arbitration process, they rarely emerge 
victorious. Research shows that employees have an overall win rate of 
around 19 percent, and when an arbitrator is paired repeatedly with the 
same employer, that win rate reduces to nearly 11 percent. In contrast, 
employees are more than 30 percent likely to win when they go to 
Federal court.
    As a result, arbitration has become a tool for employers, some 
employers, to evade accountability for violating their workers' rights.
    In the ten most populous states, workers have $8 billion stolen 
from them in minimum wage violations every year. This amounts to $3,300 
in losses per worker every year. The Federal minimum wage is inadequate 
as it is, and without protections, workers are left with even less 
while their employers line their pockets and duck litigation.
    Forced arbitration also makes it difficult for workers to seek 
justice when they experience discrimination. Arbitrations are private, 
allowing employers to be shielded from the court of public opinion. 
Additionally, the ordinary rules of discovery and evidence common to 
the courtroom rarely apply, so employers can control the evidence that 
is brought into the room. These unfair practices allow employers to 
hide abuse, while stacking the cards against workers who experience 
discrimination.
    In recent years, the Supreme Court has only worsened the problem. 
In 2018, the Court's conservative majority ruled in Epic Systems Corp. 
v Lewis that an employer can even require employees to give up their 
right to join a joint, class, or collective action. This leaves 
employees to try their case as individuals and prevents them from 
proving that their experience is one of many. Ultimately, this prevents 
employers from being held accountable.
    But as Justice Ginsburg wrote in her dissent, ``congressional 
correction of the FAA over workers' rights to act in concert is 
urgently in order.'' That's why today's hearing will focus on the 
Restoring Justice for Workers Act introduced by Chairs Nadler and 
Scott.

   First, this legislation re-opens the courthouse doors for 
        workers by prohibiting the use of forced arbitration clauses in 
        employment contracts prior to a dispute;

   Second, it reverses the Supreme Court's decision in Epic to 
        ensure workers can band together to hold unscrupulous employers 
        accountable;

   And finally, it ensures that, after an employment dispute 
        arises, employers cannot obtain arbitration agreements by 
        threat or coercion.

    I'd like to congratulate my colleagues on the Judiciary Committee 
for their efforts to advance the Forced Arbitration Injustice Repeal 
Act, or the FAIR Act, which ends forced arbitration in employment and 
many other contexts. That legislation is crucial for empowering 
workers' rights under the statutes this Committee oversees. The 
Restoring Justice for Workers Act builds on the FAIR Act by including 
essential provisions like making collective action waivers an unfair 
labor practice under the National Labor Relations Act, and by 
preventing forced post-dispute arbitration.
    If workers are shut out of the court room, they are not protected 
under the law. That is an outcome we cannot accept. I want to thank our 
witnesses for joining us today. And I now yield to the distinguished 
Ranking Member, Mr. Allen, for the purposes of him making his opening 
statement.
                                 ______
                                 
    Mr. Allen. Thank you, and good morning, Mr. Chairman. 
Before coming to Congress I spent 40 years building a business, 
creating hundreds of jobs for Georgians. From a business 
standpoint I can say without a doubt that H.R. 4841, or the so-
called Restoring Justice for Workers Act will be devastating 
for both employers and employees.
    This is just another instance of a heavy-handed government 
reaching way too far. One thing our economy doesn't need right 
now is more burdensome regulations, but that's exactly what 
H.R. 4841 is, it's a burden. By banning arbitration in 
workplace matters, this law unfairly targets job creators and 
American workers. Arbitration is known as an effective and 
proven method for resolving workplace disputes, and the 
American worker demands choice.
    Arbitration provides practical and affordable legal 
recourse for employees who believe their rights have been 
violated. It also provides the necessary flexibility to address 
workplace claims of all sizes. Banning the use of arbitration 
unfairly penalizes individual employees and employers. This 
bill would hurt workers by delaying justice and resolution to 
disputes.
    Instead of trying to tie the hands of workers and 
employers, Democrats should be focused on getting our economy 
back on track and combatting the rising prices that are caused 
by inflation, and out of control spending. The only thing H.R. 
4841 is good for is enriching our trial lawyers. The 
legislation will result in a tsunami of class action lawsuits 
leaving many workers claims unaddressed due to the costly and 
time-consuming nature of litigation.
    Outlawing arbitration and facilitating class action 
lawsuits will funnel more money directly from the pockets of 
workers and job creators into the wallets of trial lawyers. In 
most cases arbitration is significantly less expensive, and 
speedier than drawn out Court battles.
    Democrats claim that arbitration gives employers an 
advantage over employees, but in reality, costly court battles 
only benefit trial lawyers. It is unfair to force workers into 
judicial proceedings they may not be able to afford. This will 
be another case of democrat legislation that will have 
unintended consequences of hurting those it intended to help by 
imposing a top down, big government solution.
    Our judicial system is already stretched thin, and the 
COVID-19 pandemic has already made things worse. Forcing all 
workplace disputes into the courtroom won't just exacerbate 
this backlog. It will clog our judicial system completely. 
Democrats must be aware that this is bad legislation, why else 
would they exempt the unions?
    HR 4841 bans all arbitration except when it comes to 
arbitration clauses and collective bargaining agreements. 
Exempting big labor from this bill tells us everything we need 
to know about how much it will disadvantage job creators. 
Democrats also have a bad habit of trying to treat all 
Americans the same, but our workers and businesses do not fit 
into a one size fits all box.
    The American workforce is diverse. It does not make sense 
to treat independent contractors the same as salaried or hourly 
employees, independent contractors set their own hours and 
earnings, and are entrepreneurs in their own right, yet this 
legislation unfairly targets independent contractors, and will 
ultimately decrease, and disincentivize these growing 
opportunities.
    Everyone here wants to see our workers thrive. We also want 
to see those who have been mistreated receive justice. The real 
question in hand is what is the most effective and efficient 
way to get justice for both workers and employers? I believe 
outlawing arbitration as H.R. 4841 would do and shoving every 
workplace dispute into an overwhelmed court system would delay 
the very justice that mistreated workers need.
    The last thing this economy needs is more control and 
regulations from Washington. Forced lockdowns and supply chain 
crisis, rising prices, and inflation and a worker shortage, are 
already wrecking our economy. Legislation like this could be 
the nail in the coffin for many struggling job creators.
    In the end those who will suffer the most from H.R. 4841 
are the workers that won't be able to have their cases heard, 
and the employers that will be forced to tread water 
continuously under the heavy weight of endless litigation. And 
with that Mr. Chairman I yield back.
    [The statement of Ranking Member Allen follows:]

           Statement of Hon. Rick W. Allen, Ranking Member, 
        Subcommittee on Health, Employment, Labor, and Pensions

    Before coming to Congress, I spent nearly 40 years building a 
business creating hundreds of jobs for Georgians.
    From a business standpoint, I can say without a doubt that H.R. 
4841, or the so-called Restoring Justice for Workers Act, will be 
devastating for both employers and employees.
    This is just another instance of the heavy hand of government 
reaching way too far. The one thing our economy doesn't need right now 
is more burdensome regulations.
    But that's exactly what H.R. 4841 is--a burden. By banning 
arbitration in workplace matters, this law unfairly targets job 
creators and American workers.
    Arbitration is an effective and proven method for resolving 
workplace disputes. And the American worker demands choice.
    Arbitration provides practical and affordable legal recourse for 
employees who believe their rights have been violated. It also provides 
the necessary flexibility to address workplace claims of all sizes.
    Banning the use of arbitration unfairly penalizes individual 
employees and employers. This bill would hurt workers by delaying 
justice and resolutions to disputes.
    Instead of trying to tie the hands of workers and employers, 
Democrats should be focused on getting our economy back on track and 
combating the rising prices caused by inflation and out-of-control 
spending.
    The only thing H.R. 4841 is good for is enriching trial lawyers. 
The legislation will result in a tsunami of class-action lawsuits, 
leaving many workers' claims unaddressed due to the costly and time-
consuming nature of litigation.
    Outlawing arbitration and facilitating class action lawsuits will 
funnel more money directly from the pockets of workers and job creators 
into the wallets of trial lawyers.
    In most cases, arbitration is significantly less expensive and 
speedier than drawn-out court battles.
    Democrats claim that arbitration gives employers an advantage over 
employees, but in reality, costly court battles only benefit trial 
lawyers. It is unfair to force workers into judicial proceedings they 
may not be able to afford.
    This will be another case of Democrat legislation that will have 
unintended consequences of hurting those it intended to help by 
imposing a top-down, big government 'solution.'
    Our judicial system is already stretched thin and the COVID-19 
pandemic has only made things worse. Forcing all workplace disputes 
into the courtroom won't just exacerbate this backlog-it will clog our 
judicial system completely.
    Democrats must be aware that this is bad legislation. Why else 
would they exempt the unions?
    H.R. 4841 bans all arbitration, except when it comes to arbitration 
clauses in collective bargaining agreements. Exempting big labor from 
this bill tells us everything we need to know about how much it will 
disadvantage job creators.
    Democrats also have a bad habit of trying to treat all Americans 
the same, but our workers and businesses do not fit into a one-size-
fits all box.
    The American workforce is diverse. It does not make sense to treat 
independent contractors the same as salaried or hourly employees. 
Independent contractors set their own hours and earnings and are 
entrepreneurs in their own right. Yet this legislation unfairly targets 
independent contractors and will ultimately decrease and disincentive 
these growing opportunities.
    Everyone here wants to see workers thrive. We also want to see 
those who have been mistreated receive justice. The real question at 
hand is-what is the most effective and efficient way to get justice for 
both workers and employers?
    I believe outlawing arbitration, as H.R. 4841 would do, and shoving 
every workplace dispute into an overwhelmed court system will delay the 
very justice that mistreated workers need.
    The last thing this economy needs is more control and regulations 
from Washington.
    Forced lockdowns, a supply chain crisis, rising prices and 
inflation, and a worker shortage are already wrecking our economy. 
Legislation like this could be the nail in the coffin for many 
struggling job creators.
    In the end, those who will suffer the most from H.R. 4841 are the 
workers who won't be able to have their cases heard and the employers 
who will be forced to tread water continuously under the heavy weight 
of endless litigation.
                                 ______
                                 
    Chairman DeSaulnier. Thank you, Mr. Allen. Without 
objection all of the Members who wish to insert written 
statements into the record may do so, submitting them to the 
Committee Clerk electronically in Microsoft Word format by 5 
p.m. on November 18, 2021.
    Now I'd like to go to our witnesses. Thank you all for 
participating today, we look forward to all of your testimony. 
I'd like to now introduce the witnesses. Professor Alexander 
Colvin is the Kenneth F. Kahn Dean of the Cornell University 
School of Industrial and Labor Relations.
    Ms. Glenda Perez is a former Implementation Set-Up 
Representative at Cigna.
    Mr. Roger King is a Senior Labor and Employment Counsel at 
the H.R. Policy Association.
    And Ms. Kalpana Kotagal is a Partner in the law firm of 
Cohen Milstein Sellers & Toll. I apologize for the 
mispronunciation. As you can imagine with my name, I'm used to 
people doing the same thing to my name, so I apologize. 
Unfortunately, it hasn't made me better at pronunciations.
    We appreciate the witnesses for participating today and 
look forward to your testimony. Your written statement will 
appear in full in the hearing record, and you are asked to 
limit your oral presentation to five minutes, and your written 
statement will appear in full in the hearing record, and you 
are asked to limit your oral presentation to a five-minute 
summary.
    After your presentation we'll move to Member questions. The 
witnesses are aware of their responsibility to provide accurate 
information to the Subcommittee, and therefore we will proceed 
right now with their testimony. I will first recognize 
Professor Colvin, go ahead.

STATEMENT OF ALEXANDER COLVIN, JD, Ph.D., KENNETH F. KAHN 1969 
    DEAN, SCHOOL OF INDUSTRIAL AND LABOR RELATIONS, CORNELL 
                           UNIVERSITY

    Mr. Colvin. Thank you. Thank you, Chairman DeSaulnier, 
Ranking Member Allen, and distinguished Members of the 
Subcommittee. It's a pleasure to have the opportunity to 
testify today about the impact of forced arbitration on 
American workers.
    My name is Alexander Colvin. I am the Kenneth Kahn Dean and 
Martin Scheinman Professor of Conflict Resolution at Cornell 
University. Most workers discover that they have entered into 
forced arbitration after the fact. They are fired from their 
job, and thought their rights are being violated, so they went 
to see a lawyer.
    After asking some questions, and reviewing documents the 
lawyer explained that way back when they were hired amidst the 
stack of paperwork, we all sign at the start of a job was a 
document stating that the worker agreed to resolve any future 
employment law claims against the employer through arbitration.
    Now the worker might believe that private arbitration forum 
established by a contract drafted by the employer, could not 
govern claims under statute enacted by Congress or State 
legislature, that they retained their right to their day in 
Court. The worker might object that he or she was essentially 
forced into agreeing because the employer stated that the 
arbitration clause was a term and condition of employment. No 
signature, no job.
    But the Supreme Court has held that an arbitration clause 
imposed as a term and condition of employment is enforceable. 
That's the essence of forced arbitration. The worker is 
required to agree to arbitration as a condition of getting or 
keeping a job. This forced arbitration clause can cover the 
vast majority of rights the worker might have from protection 
against racial discrimination, sexual harassment, to rights of 
returning veterans, to rights to be paid the minimum wage and 
overtime.
    The arbitration clause is drafted by the employer who is 
effectively deciding who is administering arbitration, and what 
the rules and procedures will be. An example of the rules that 
many employers include in forced arbitration is privacy 
provisions that prevent the worker from disclosing what 
happened in arbitration.
    The result is that employees and public regulators may be 
unaware of systematic problems of discrimination or sexual 
harassment at a company because individual cases are kept under 
a veil of confidentiality in the private form of arbitration.
    Under the recent the recent Epic Systems precedent of the 
Supreme Court the rules of forced arbitration can also include 
a ban on bringing a class action or a collective claim. The 
worker is unable to pursue a class action in court because of 
the forced arbitration clause, and unable to pursue a class 
action arbitration because the rule as drafted by the employer 
do not allow it, essentially a heads I win, tails you lose 
situation. The inability to bring a class or collective action 
leaves many with low value claims with no effective recourse at 
all.
    What do we know about how this system of forced arbitration 
is operating? My own empirical research, and that of other 
scholars in the area has yielded the following conclusions. 
First, forced arbitration has become a widespread practice. In 
my 2018 survey, I found that over half of all establishments in 
the survey were imposing forced arbitration on their employees, 
that's 60 million American workers subject to it.
    Second, employees do worse in forced arbitration than in 
litigation, winning fewer cases and recovering less damages. My 
research found that taking into account the chance of winning, 
and likely damages, the average recovery per case for employees 
in forced arbitration was only $25,000.00 compared to 
$143,000.00 in Federal court, and $328,000.00 in State court.
    Similarly, a new 2021 study by Mark Gough of Penn State 
University finds that employees receive 203 percent greater 
damage in Federal court, and 165 percent greater damage in the 
State court than in forced arbitration. And that's controlling 
for differences in Plaintiff and case characteristics, 
comparing apples to apples.
    Third, employees are at a structural disadvantage in forced 
arbitration procedures. There's evidence of a repeat clear 
advantage to corporations that have multiple cases before the 
same arbitrator where these employers tend to win more often 
and have lower damages awarded against them.
    Fourth, forced arbitration reduces access to due justice. 
As a result of a less favorable outcome for employees in forced 
arbitration, there's a reduced ability of plaintiff attorneys 
to accept cases under the normal contingency fee basis, leading 
to far fewer cases being filed. Research by Cynthia Estlund of 
NYU finds that cases are being brought in forced arbitration at 
only 1 to 2 percent the rate they are brought in court. If 
cases are not being brought, this means that our employment 
laws are going unenforced for much of the workforce that is 
subject to forced arbitration.
    After the problems be addressed, the provisions of H.R. 
4841, Restoring Justice for Workers Act, would directly address 
the more pernicious effects that we're seeing in forced 
arbitration through ensuring that no pre-dispute agreements are 
valid or enforceable, and restoring the ability to bring class 
actions and collective claims.
    It also appropriately preserves the beneficial use of 
arbitration in the collective bargaining and voluntary post-
dispute context where it's been successfully used for many 
years. By contrast, the current system of forced arbitration 
imposed on workers by corporations, undermines employment 
rights and should be eliminated. Thank you for your time.
    [The prepared statement of Mr. Colvin follows:]

                 Prepared Statement of Alexander Colvin
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]


    Chairman DeSaulnier. Thank you, Professor. Thank for being 
on time. Now I would like to recognize Ms. Perez, your five 
minutes are available.

  STATEMENT OF MS. GLENDA PEREZ, FORMER IMPLEMENTATION SET-UP 
                     REPRESENTATIVE, CIGNA

    Ms. Perez. Thank you, Chairman. Chairman DeSaulnier, 
Ranking Member Allen and Members of the Committee, thank you 
for the opportunity to testify in support of important 
legislation that would end forced arbitration for workers 
across America. My husband I used to work for Cigna, a global 
healthcare insurance company from October 2013 to July 2017.
    I was an Implementation Set-Up Representative structuring 
both national and commercial pharmacy benefits. I trained new 
hires, and quickly became a subject matter expert. I won the 
Cigna Champion Award 2 years in a row. Through Cigna I 
volunteered for the Red Cross and Habitat for Humanity, and I 
was featured on Cigna's Twitter page.
    To say I was proud is an understatement. I was honored to 
say I work for the company. In March 2017, meetings were held 
with my team to address an ongoing issue related to pharmacy 
benefits. The following month my manager singled me out as 
being responsible for making errors and called me a risk to the 
team.
    My manager put me, apparently with other employees, on a 
performance corrective action plan. I was shocked and confused, 
as I was sure that I had not made any such errors. When I asked 
to see the evidence of the errors, my manager refused.
    I asked my husband who also work at Cigna if he could find 
the report with the alleged errors. He found reports of other 
individuals, specifically white women, who were making those 
errors, however they were not participating in the performance 
corrective plan. I filed a complaint with H.R. regarding my 
manager's discrimination against me.
    Normally, a full investigation takes around 60 days. My 
investigation took 1 day, and H.R. simply agreed with my 
manager. My manager then put me on a far more oppressive 
performance plan.
    Two months after reporting my manager to H.R. for 
discrimination I was fired. When I wanted to file a complaint 
for racial discrimination and retaliation, H.R. said it must be 
handled in arbitration.
    I didn't really understand what arbitration meant. 
Apparently, I had e-signed an arbitration document in my 
onboarding employee packet. I quickly learned that forced 
arbitration wasn't an informal, internal process, but instead a 
complicated, formal, and binding process that was nothing like 
mediation or going to court.
    I couldn't find any attorney willing to represent me in 
forced arbitration. I don't have any legal background 
whatsoever, so I tried to do my own research. We couldn't 
afford internet at home, so I used the Wi-Fi of a local dentist 
in the parking lot and struggled to pay for gas to drive to the 
law library.
    This was all when I was caring for my three children and 
looking for a new job. I filed a complaint in forced 
arbitration for claims of racial discrimination and 
retaliation. Cigna chose the arbitration provider, and it took 
several months just to choose an arbitrator.
    I tried to get information from Cigna to prove my case, 
including my employee personnel profile. Cigna's attorneys said 
that discovery request would cost over one million, and the 
arbitrator denied my request. Cigna filed a motion for summary 
judgment, and a couple of days later the arbitrator rules in 
Cigna's favor and canceled the hearing.
    I was devastated, as I wanted to tell my side of the story 
at the hearing. That night my husband found a photo on the 
internet of the arbitrator, and the attorney for Cigna looking 
very friendly, hugging each other at the arbitrator's 50th 
birthday party. The arbitrator also used to work for the firm 
representing Cigna, and even listed Cigna's attorney as a 
reference on his CV.
    To me this obviously showed that the arbitrator was not 
impartial. Had I known of this personal relationship, I would 
have moved to disqualify him, but it was never disclosed. I 
filed the motion to vacate the arbitrator's award in court with 
the help of my husband who hired a process server to deliver 
Cigna my motion. After Cigna was served, they fired my husband.
    It turned into a 4-year battle with no real opportunity to 
have my voice heard. A person should be able to hold a 
corporation accountable when they violate the law. Now I know 
that's not the case because of forced arbitration. Forced 
arbitration left us barely surviving. Little by little, the 
things we worked so hard for were taken from us.
    Our newly bought house is in foreclosure, our car was 
repossessed, we had to empty our 401K's and sell all my 
jewelry, including my wedding ring. We were on food stamps and 
relied on family Members to help pay our bills, and for things 
our kids needed. Not only were my kids robbed of their parents 
for 4 years, but I was robbed of my dignity.
    I'm in this fight to end forced arbitration because no one 
should have to go through what I went through. Workers should 
be able to protect their rights and have access to our civil 
justice system.
    I urge the Members of this Committee to support, and for 
Congress to pass the Restoring Justice for Workers Act, and the 
Forced Arbitration Injustice Repeal Act, a bill that I have 
long advocated for, which would end forced arbitration for 
workers and consumers. Thank you and I look forward to your 
questions.
    [The prepared statement of Ms. Perez follows:]

                   Prepared Statement of Glenda Perez
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

    Chairman DeSaulnier. Thank you, Ms. Perez. We'll now go to 
Mr. King. Mr. King the floor is yours.

 STATEMENT OF ROGER KING, SENIOR LABOR AND EMPLOYMENT COUNSEL, 
                    H.R. POLICY ASSOCIATION

    Mr. King. Thank you, Mr. Chairman, Ranking Member Allen, 
and distinguished Members of the Subcommittee. I've spent about 
50 years of my professional life working in the arbitration 
area. I've drafted arbitration agreements. I represented 
clients in arbitration proceedings. I've been deeply involved 
in policy discussions regarding the merits of arbitration.
    I also have followed closely the FAIR Act, Mr. Chairman, 
that you referenced earlier, and I had the opportunity to 
testify before the House Judiciary Committee earlier this year 
regarding the FAIR Act, and a copy of my testimony to that 
Committee is included in my statement this morning.
    I've also been involved in class action and collective 
action matters. So my testimony today represents that 
substantial professional and personal experience. This 
legislation that we're considering today, H.R. 4841 has two 
primary objectives. The first is to completely eliminate pre-
dispute arbitration.
    I submit to you that is a serious mistake. The pre-dispute 
arbitration has worked well. And indeed, the approach this 
legislation is taking would prohibit Professor Colvin and I 
just to sit down and work out a previous arbitration procedure 
that we could agree upon, so nothing is available for pre-
dispute arbitration.
    Second, the total prohibition on class action waivers is a 
substantial overreach, and of course really the proof is in the 
pudding here as Ranking Member Allen stated because labor 
unions and employers are permitted to continue such 
arrangements. That in and of itself shows a major deficiency in 
this legislation.
    Let me move through a few points that I have in my 
testimony, but before I do that, I think we have a really 
substantial misunderstanding here. Virtually everything that 
goes on in an arbitration proceeding, at least the vast 
majority of cases are what I would call standard workplace 
issues.
    Did I get the raise that I was entitled to? Was I properly 
disciplined? Did I get the vacation when I should have gotten 
it? Those are the kinds of day-to-day matters that are 
addressed in previous arbitration. They're not complex, they 
don't require expert witness. They don't require class action 
litigation.
    Those are what work. Those procedures are what work-related 
matters address. So you're going way overboard on this whole 
discussion. You're making everything into a very complex 
matter. But to the extent statutory rights are involved in any 
of these disputes, they are preserved.
    It's improper to say that some of the testimony being 
submitted today, that statutory rights are being eliminated. 
That's a misstatement of the law. This legislation overrules 
virtually or attempts to overrule virtually decades of Supreme 
Court case law, and these are not just 5-4 decisions.
    Justices Kennedy, White, Kagan, et cetera, were in the 
majority in these cases. They can't all be wrong. And it's a 
misstatement to say that the Federal Arbitration Act only is 
applicable to disputes between merchants. That is just a simple 
misstatement.
    Now the proposed legislation and subsequent do away with 
any incentive for employers, employees, and indeed even unions 
to a certain extent, to work out a pre-dispute arbitration 
procedures. The whole flow of our jurisprudence is going to a 
different approach. We're trying to resolve disputes through 
alternative dispute resolution, that's the way this process 
should work.
    With respect to union matters and the carve out, there's 
some real misstatements here also, or misunderstandings. An 
employee in a union environment doesn't get to decide whether 
the matter goes to arbitration, the union makes that decision. 
The employee doesn't decide who it's counsel is, the employee 
doesn't decide who the arbitrator is, and in fact virtually 
every arbitration proceeding between employers and employees is 
subject to the American Arbitration rule.
    So these are not complex negotiated agreements, et cetera, 
they're standard of the mill agreements. With respect to our 
court system, as Ranking Member Allen said, our court system is 
simply overflowing today with issues that have been waiting 
sometimes years for disposition. It is suggested cases are 
being resolved in 8 months as one of the witnesses suggest, is 
simply a misstatement of fact.
    Finally, with respect to comparing apples and oranges, in 
all due respect Professor, your stats are right, but the 
comparisons are incorrect. You're comparing jury trials with 
standard run of the mill arbitration settlements in most cases, 
or awards. Those awards are much different in a jury trial than 
they are in a standard I got disciplined incorrectly type of 
arbitration.
    You can't compare them. That's not just apples and oranges, 
that's apples and zebras. One of the most recent studies that's 
being articulated in the press, and apparently being used to 
support this legislation are the Trial Lawyers Association 
counts settlements as losses for the employee.
    That's a misleading and inappropriate way to proceed. So 
the stats in this area actually show just the opposite. When 
you compare actual apples to apples cases, the claimants in 
arbitration do much better. This arbitrable system also has 
very distinguished and ethical people.
    I really think it's a misstatement to characterize 
arbitrators of having substantial conflicts of interest, or 
somehow always siding with the corporation. The arbitrators I'm 
aware of over my 50 years of practice are very ethical, and 
they try to do the right thing.
    Chairman DeSaulnier. Mr. King, if you can wrap up, please?
    Mr. King. Yes, yes certainly, Mr. Chairman. They try to do 
the right thing, and they don't play favorites. They have 
enough business, and they do the right thing. Thank you very 
much.
    [The prepared statement of Mr. King follows:]

                    Prepared Statement of Roger King
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

    Chairman DeSaulnier. Thank you. I appreciate it. Now we'll 
go to our last witness Ms. Kotagal. How was that?
    Ms. Kotagal. That was good thank you.
    Chairman DeSaulnier. I'm a slow learner, but I'm not very 
bright.
    Ms. Kotagal. It's a hard name. I appreciate the effort. 
It's Kalpana Kotagal. And my family is from India, so that's 
where the name comes from.

   STATEMENT OF KALPANA KOTAGAL, JD, PARTNER, COHEN MILSTEIN 
                      SELLERS & TOLL PLLC

    Ms. Kotagal. Chairman DeSaulnier, Ranking Member Allen, and 
distinguished Members of the Subcommittee, thank you for 
inviting me today. At the outset I want to just say that I and 
my colleagues at Cohen Milstein have cases currently pending in 
arbitration and I won't be talking about those cases today.
    I am eager, however, to offer what I have learned from 
litigating employment cases in forced arbitration for more than 
a decade. If you take nothing else away from my remarks today, 
please hear this. In my experience, forced arbitration in the 
employment setting poses such a threat to a workers' ability to 
vindicate their rights, and to our system of common law, that 
congressional action is required.
    The justification for forced arbitration is predicated on 
myths, on fictions about how arbitration is a good thing for 
workers, and we've heard many of those today. I want to address 
a few of them. Myth No. 1 forced arbitration reflects actual 
consent and is a negotiation between similarly positioned 
parties. This is not true.
    On the one side are well-resourced corporations. On the 
other are individual workers who must commit to arbitration 
before a dispute has arisen. Pre-dispute, workers often can't 
appreciate that eventual claims will be decided in confidential 
and individualized forums, with restricted discovery and 
limited appellate review before a decisionmaker often selected 
by the employer.
    There are places that binding arbitration in the employment 
setting may make sense--where it is the product of negotiation 
between parties of equal bargaining power, and that's where 
this piece about unions and employers, where the union wields 
the authority of the collective of workers, as well as 
substantial experience.
    That's not the case in most forced arbitration, as Ms. 
Perez's story tells us. Moreover, in my experience forced 
arbitration burdens those who are already marginalized. Hourly 
workers, women, black workers, and workers of color.
    Myth No. 2 forced arbitration is speedy. Consider one of my 
ongoing cases, a sexual harassment case filed in 2008. It has 
already gone through four appeals of the arbitrator's 
decisions, and we still haven't made it to trial. This is 
because many arbitration rules permit appeals as a matter of 
right where there would be no such option in court. In our 
case, the appeals included challenging the arbitrator's 
interpretation of the arbitration agreement to permit my 
clients to even seek class certification, a step that doesn't 
exist in court at all.
    These years-long appeals are ironic. Arbitration was 
heralded as an opportunity to free up the courts, but evidence 
suggests that courts are increasingly dealing with litigation 
about arbitration.
    Finally myth No. 3. Forced arbitration does not impede the 
effective mitigation of rights. The truth is that forced 
arbitration does just the opposite, by deterring workers from 
filing claims to vindicate the rights granted to them by 
Congress. Forced arbitration provisions often include joint 
action bans, or as employers like to call them class action 
waivers, which prevent workers from being able to proceed 
together, even when their claims challenge identical workplace 
misconduct.
    In my experience, the ability to conduct discovery and 
distribute costs to advance the shared claims of many workers 
at once makes those cases possible. Barring class and 
collective actions makes it nearly impossible for workers with 
smaller claims.
    And while mandatory arbitration in employment with adequate 
guardrails post-dispute may sometimes make sense, I cannot as I 
sit here, envision a situation where bans on joint action ever 
do. Employer's own statements confirm that their primary 
concern is preventing workers from joining together. Indeed, 
some companies have announced their decision to end forced 
arbitration only for individual sexual harassment matters, 
acknowledging that it impedes accountability. If ending forced 
arbitration is the right thing to do, as one company put it, 
for individual sexual harassment claims, why are systemic 
discrimination claims any different?
    Joint action bans also cause inefficiency and inconsistent 
outcomes, whereas class and collective actions can only proceed 
where a court agrees that the claims can be fairly and 
efficiently adjudicated together, and that class counsel is 
experienced.
    Joint action bans apply categorically, requiring serial 
litigation of the exact same issue. Claims that might have been 
adjudicated together in a single action are instead decided 
many times over, risking inconsistent outcomes. Finally, forced 
arbitration undermines our system of common law, by which 
judges offer opinions that are subject to scrutiny.
    Forced arbitration is typically confidential. Matters of 
public consequence are hidden from sight. I was heartened to 
see in Mr. King's testimony that he agrees. The secrecy in 
which forced arbitration is shrouded is alarming and should be 
prohibited.
    Moreover, arbitral decisions are not precedential. There is 
no notion that today's decisions must flow from yesterday's. 
The Supreme Court has described forced arbitration as nothing 
more than a change of forum, in reality moving employment 
claims from the Courthouse to a conference room fundamentally 
changes the playing field, creating a system of secret 
decisions that lack protections and undermine the integrity of 
our legal system, and the atrophy of common law.
    With that I thank you, and I welcome your questions.
    [The prepared statement of Ms. Kotagal follows:]

                 Prepared Statement of Kalpana Kotagal
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

    Chairman DeSaulnier. Thank you all, all the witnesses for 
your testimony. Under Committee Rule 9(a) we will now question 
witnesses under the five-minute rule. I'll be recognizing 
Subcommittee Members in seniority order. As Chair, I now 
recognize myself for five minutes.
    Professor Colvin you discussed research by Cynthia Estlund 
on how workers bring cases to forced arbitration only 1 or 2 
percent. Many Americans don't look at the judicial system as 
being as fair as we would like it to be. Some might use the 
word ``rigged''. Can you talk a little about your research and 
if you would like to respond to Mr. King's comments about your 
research feel free to use some time for that as well.
    Mr. Colvin. Sure. So I think one of the critical issues 
here is, do we have a forum that allows workers effectively to 
bring claims. And Cynthia Estlund's research, which builds on 
some of my own work, has found that we really don't see very 
many cases at all being brought in arbitration relative to the 
large number of workers being covered by forced arbitration.
    Now what's going on there. I think really the crucial thing 
is that the outcomes are so much less in forced arbitration--
the damage awards, the win rates are lower, that it's really 
hard to bring a case. One thing that we know from the research 
is that it's really hard to do it by yourself.
    Ms. Perez's testimony I think is very reflective of what we 
see in the research. It's a huge hill to climb to do it by 
yourself. You need a lawyer, but in practical terms the lawyers 
can't bring the cases when the outcomes of the chances of 
success are really low. And that's really the big barrier we're 
seeing, why we don't see very many cases.
    And you know the research we're trying to pull this out in 
terms of controlling for all the different factors that may be 
going in here, but we're really consistently seeing this large 
barrier to bringing the cases.
    Chairman DeSaulnier. Thanks. Ms. Perez maybe you could 
speak to your experience. You mentioned about how difficult it 
was just to get the resources you needed, and an attorney given 
your budget. If you could speak to that a little.
    Ms. Perez. Yes. I have no legal background whatsoever, so 
entering into arbitration, I didn't know what I was going into. 
The company has all the rules because they're the ones that 
hire the provider, so they know what to expect. When I entered 
into the arbitration, I was told in the beginning that it would 
be informal, however, it quickly became formal.
    So I had to quickly learn the Federal Rules of Civil 
Procedure. Again, I have no legal background, so having to 
learn and get my own discovery it was just a tug and pull, and 
many trips to the law library, using their computers. It was 
extremely difficult because not only did I have to learn this, 
but I also had to write the motions, so it was extremely 
difficult.
    Chairman DeSaulnier. Thank you. Ms. Kotagal maybe you can 
talk a little bit about just the difficulty that employees have 
with discovery. Ms. Perez talked a little bit about this.
    Ms. Kotagal. Yes absolutely, thank you. So the thing about 
proceeding along discovery and arbitration is that the rules, 
the Federal Rules of Civil Procedure, the Federal Rules of 
Evidence, the tools that we use to shape the discovery that we 
ask for are sometimes not present.
    And then the second piece of it that I think is really 
important is that where you are forced to proceed on an 
individual basis, you have access to less discovery. You know 
the rules of so-called proportionality in discovery mean that 
even if Ms. Perez were the victim of a pattern of 
discrimination at the company, she wouldn't have access to 
evidence showing that.
    And so those limits on what you can get as an individual 
trying to understand where your situation fits into the 
company's policies are tremendously significant.
    Chairman DeSaulnier. Thanks. Professor Colvin in the short 
time I have left. I'm from the San Francisco Bay Area. Like Mr. 
Allen I was an employer, I owned restaurants. I didn't have 
these issues. Best not to have conflict with your employees, 
but I understand how to make a payroll and manage people.
    A lot of the criticism on these provisions in my area were 
in tech companies, and these were fairly sophisticated 
employees. The California legislature has moved to do what they 
can under preemption to change that. Would you comment on that 
at all, specifically in that industry?
    Mr. Colvin. So assuming we see a lot of cases in the tech 
industry, Uber famously has had a long-standing set of 
conflicts involved forced arbitration clauses. So it's a 
critical issue in that industry. California it's about two-
thirds of business in California using forced arbitration, so 
it's having a massive impact there, and there's very little the 
states can do under the Supreme Court's preemption doctrines.
    This really needs to be regulated by Congress. Congress is 
the one that has the ability to act in this area.
    Chairman DeSaulnier. Thank you. With that I will turn to 
the Ranking Member, Mr. Allen go ahead.
    Mr. Allen. All right. Thank you, Mr. Chairman. Mr. King one 
of the reasons Congress enacted the National Labor Relations 
Act was to curtain certain private sector labor and management 
practices which can harm workers, businesses, and the economy. 
How did the Supreme Court's Epic System's ruling in 2018 
protect the ability of workers and employers to resolve 
disputes outside of Court?
    And how would overturning that ruling as this bill would 
do, affect workers, businesses, and the economy?
    Mr. King. Well, Mr. Allen the Supreme Court and Epic 
Systems followed what had been decades of Supreme Court case 
law. As I mentioned earlier, both so-called conservative and 
liberal justices agreed in many instances.
    And what the Court did in Epic is to harmonize the Federal 
Arbitration Act, and the National Relation's Act. And it's 
improper to conclude that an employee has no regrets. An unfair 
labor practice charge could be filed on any number of different 
theories, but also an employee can file if it has a problem 
outside of the arbitral system, complaints, charges with the 
Equal Employment Opportunity Commission, with the National 
Relations Board, State and Federal Agencies.
    So what the Court in essence said in Epic, arbitration 
should be encouraged, it's indeed the intent of the Congress. 
It can be utilized in a way that's fair, and also in arbitrable 
systems its statutory rights, whatever they may be, are 
preserved, contrary to other suggestions, and there's nothing 
that undermines the National Labor Relations Act in any way, 
shape, or form.
    And finally, the petitioners in the case, those that are 
asking the Court to review the entire matter, laid out--I have 
this in my testimony, any number of ways that workers in a non-
union environment can work together to pursue individual 
claims, and bring them to the attention of the employer.
    But let me just, Mr. Allen, finish this one point. This 
issue of access, and filing. Here's what really happens, 
contrary to the testimony you're hearing, and based on 
practical real-world experience. Cases are settled, as the 
Professor notes in his testimony. Employers have good counsel. 
They settle matters out, and you have steps in the process, 
just like in the union process, and during those steps--they're 
called grievances generally in the union environment, employer 
and employees reach agreement.
    That's why you don't have these matters going to any type 
of arbitration. That's what practically happens here.
    Mr. Allen. Well, in talking about that further, you know, 
the Constitution provides for equal protection under the law, 
H.R. 4841 bans mandatory arbitration agreements that are used 
to settle disputes between a worker and an employer.
    Is the bill consistent without a dispute between a union 
and an employer, and why does the bill treat workers and labor 
unions unequally?
    Mr. King. Well, its inherently inconsistent. I can't think 
of a practical or logical reason to support that other than 
intense lobbying pressure from organized labor. The fact of the 
matter is what happens in a labor environment in arbitration, 
is very similar to what happens in a non-union environment.
    The American arbitration rules are followed in the union 
environment. They're followed by and large, if not almost 
exclusively, in the non-union environment. There's not much 
difference if any. And this myth that in the employee and union 
environment as I noted in my opening statement, has a lot of 
control over the process.
    That's just flat not correct. So there is no rationale that 
I can think of that would support this differentiation, and the 
suggestion that somehow these are sophisticated negotiations 
between a union and employer to arrive at an arbitration 
system. That's just not true. The standard arbitration clause 
and effective bargaining agreement is generally no different 
than a non-union environment.
    Mr. Allen. Well, one of our testimoneys about the fact that 
the appeals process was unfair in arbitration. But there's an 
appeals process in the court system is there not? I mean I 
don't quite--in other words, are they both equally unfair? The 
appeals process? Or do they both apply to the same process?
    Mr. King. Well, first of all the statement about appeals is 
a misstatement. There may be certain arbitration cases, certain 
arbitration clauses that appeal rights, but generally that's 
not the case. Where appeals come in is in the court system as 
you know. That takes literally years in the process. I don't 
see appeals coming in through at least the many arbitrations 
I've been involved in, they just don't happen.
    Mr. Allen. Well, thank you so much Mr. King, and with that 
Mr. Chairman I yield back.
    Chairman DeSaulnier. Thank you, Mr. Allen. I'll now 
recognize Representative Wild for her five minutes.
    Ms. Wild. Thank you, very much, Mr. Chairman. I first want 
to address some things that you said Mr. King. I come at this 
from a fairly unique perspective on this Committee. I was a 
lawyer for 35 years before I came to Congress. I handled a lot 
of employment cases, I've represented both plaintiffs, in other 
words the employees, and I've represented employers as 
defendants, and I've also served as an arbitrator.
    So I was listening to your remarks very, very,--all of the 
witnesses' remarks very, very carefully, and I have to tell you 
Mr. King that I differ with your assessment of arbitrators and 
arbitration generally.
    First of all I have--I don't in any way mean to impugn the 
reputation, or qualifications of arbitrators who preside over 
these cases. But I do have to say that in my experience, which 
is fairly extensive, arbitrators are very much dependent on 
repeat business if they want to maintain arbitration as a full-
time practice, as opposed to practicing the other kind of law. 
And that means the institutional clients, whether it be 
hospitals, or employers, or you know, any kind of industry who 
continually refer cases to them for arbitration, I believe have 
undue influence and I don't again mean to suggest that they are 
doing this intentionally.
    But it is almost impossible, and I speak as somebody who 
has been an arbitrator, to ignore the fact that a party who has 
appeared before you on multiple occasions and likely will 
again, doesn't have some sort of advantage over the lone 
employee who has this one claim and will never again appear 
before the arbitrator.
    So I feel like that needs to be pointed out. In addition, 
arbitration can be a very, very expensive process. The hourly 
fees for most of the arbitrators that I used to retain through 
the American Arbitration Association, were somewhere on the 
order--and this was a few years ago now, of $600.00 per hour at 
the low end.
    So you know, to suggest that this is an inexpensive 
process, or something that is within the reach of the 
plaintiffs, I think is unfair. And keep in mind, as has already 
been pointed out, that the number of damages recoverable is 
often, although very significant to the plaintiff, the 
litigant, not so significant in the whole scheme of things for 
lawyers who are being asked to take on their cases.
    And by the way, the lawyers who take on the cases for these 
employees, are doing so nine times out of ten on a contingent 
fee basis, meaning that lawyer is bearing all the expenses 
while the case is proceeding, and it also means that they are 
taking on the risk of whether the case will be successful or 
not.
    And so again, I don't think that we can in any way suggest 
that an employer and an employee are on a level playing field 
in the arbitration world. Honestly, I'm not sure that they're 
on a level playing field in a courthouse either, but that is 
largely due to jury bias and that kind of thing which is unique 
to each jurisdiction and venue.
    And finally, I think it's really important to note that 
what we are talking about here today is forced arbitration. 
There is nothing to stop an employee from agreeing to 
arbitration when the time arises. If that employee and his or 
her lawyer makes the determination that arbitration is the way 
to go, that because of delays at the courthouse, because of 
jury bias that's known in that venue, an employee and his or 
her lawyer may very well make the decision to go forward with 
arbitration.
    But what we're talking about here is whether the employee 
should be forced to go through arbitration. That is really the 
salient issue, and they do not have equal negotiating power at 
the time of commencing their employment. So I just felt that 
those points needed to be made.
    I'm going to move on to Dr. Colvin because I have a 
question for you about wage theft. Dr. Colvin, your testimony 
notes that almost 65 percent of businesses that pay less than 
$13.00 per hour have forced arbitration clauses. So this would 
apply without doubt to most fast-food workers, most retail 
workers, and people who literally have no negotiating power 
over their terms of their employment. Am I correct?
    Mr. Colvin. That's correct yes.
    Ms. Wild. According to the National Employment Law Project 
in 2019 alone employees of these businesses lost 9.2 billion 
dollars to wage theft. Can you comment on how mandatory 
arbitration contributes to this issue of wage theft?
    Mr. Colvin. So one thing we know in that area is that the 
collective claims, class action claims, are one of the primary 
ways of addressing those issues because they often apply to 
many workers. Imagine in restaurant chains, if you have say a 
minimum wage worker missing a 30 minute break, being paid a 
day. If you take over 6 months that would only amount to about 
$435.00 per worker. That's a pretty small amount, not enough 
for an individual case, but if you aggregate that over 1,000 
workers in a restaurant chain, that's $400,000.00. That's a 
case you can bring, and you can move forward with that.
    So the class action waivers really impact those low-wage 
workers a lot.
    Ms. Wild. So and the short version of that is that a single 
employee who experiences wage theft is likely to be unable to 
find a competent lawyer to handle his or her claim?
    Mr. Colvin. That's exactly right. We just don't see those 
cases being brought.
    Ms. Wild. Thank you very much. Mr. Chairman I thank you for 
your indulgence, I see I am over time, and I apologize for 
that.
    Chairman DeSaulnier. That's quite all right. Thank you for 
your comments. I do want to just mention that California law 
was directed as Congresswoman Wild mentioned in her comments at 
forced arbitration, and it's currently being litigated, but 
it's been upheld in the 9th Circuit. Now we'll go to Mr. 
Walberg. Mr. Walberg?
    Mr. Walberg. Thank you, Mr. Chairman. And thanks to the 
panel for being with us today. Mr. King, H.R. 4841, severely 
limits the use of arbitration agreements, and encourages 
litigation. We all know that litigation is expensive, 
adversarial, and slow. Can you discuss the shortcomings of 
litigation resolving disputes in the workplace as compared to 
the benefits of arbitration, and additionally how would a 
movement toward increased litigation impact low to middle 
income worker's ability to have their complaints resolved?
    Mr. King. Thank you, Mr. Walberg. It's nice to see you 
again and thank you for the question. Let me start by the 
expense issue. We just heard a comment that it's expensive to 
go to arbitration. Let me concede that for just a moment, but 
it's more expensive to go to court. And to somehow suggest that 
court litigation is less expensive than arbitration is a non-
starter.
    Second, by forcing workers to go to the court system, 
they're going to be even more hard pressed to find attorneys. 
As Professor Sam S. Recker said and it's noted in my testimony, 
the House Judiciary Committee, many workers are going to be 
without any form whatsoever. So just the opposite is going to 
occur.
    By having informal, pre-dispute systems in place that are 
fair, and to suggest they are not is also a misnomer. Virtually 
every arbitral system I know that employers have followed the 
American Arbitration procedures and protocols. Yes, national 
disclosure, or excuse me, non-disclosure agreements should be 
examined. Secrecy should be taken out of the process, but the 
process is fair Mr. Walberg, and it works.
    And as I said earlier, the reason we don't have more of a 
filing system here is that workers are arriving at settlements. 
This is a system that ought to survive. It provides good 
benefits. Back to your question. House Bill 4841 prohibits all 
together any type of pre-dispute arbitration system period. 
That makes absolutely no sense.
    Mr. Walberg. Let me just add on to the question. In class 
action lawsuits, do employees often see large financial awards 
when they're claims are successful? And conversely, how do 
class action lawyers fair?
    Mr. King. Well, they go in opposite directions. The lawyers 
always win, and the employer/consumer in most cases, in a 
recent study that I just saw yesterday, even further emphasizes 
this, do much worse. The only winners here really are the 
plaintiff's trial lawyers. It's quite unfortunate.
    Senator Ernest just introduced a bill last night that would 
stop that process and prohibit the trial lawyer form receiving 
any more than they award to the claimant. That's where we ought 
to have this discussion. It's really interesting.
    The consumer gets what the employee gets, the worker gets 
very little unfortunately.
    Mr. Walberg. It's an old story that we've heard. Mr. King, 
according to the Director of the Administrative Office of the 
U.S. Courts, as of March 2020, the number of civil cases 
pending for more than 3 years is nearly 30,000.00 cases.
    Mr. King. Right.
    Mr. Walberg. And that statistic came before the worst of 
the COVID-19 pandemic. What impact would H.R. 4841 have on the 
current case backlog, and how would this impact workers?
    Mr. King. It would increase that $30,000 figure many fold 
Mr. Walberg. The court systems are absolutely overflowing at 
the moment. I note that in one of the submitted testimoneys 
today that the Federal Rules of Civil Procedure have an 8-month 
target for civil litigation.
    That's not being met, that's not even close to being met. 
And in class actions it takes years, literally years often just 
to litigate the procedural issue of whether we have 
commonality, typicality, et cetera. Class action litigation is 
a procedural morass. It's one of the absolute worst procedural 
ways to do business in the courts.
    So the short answer to your question is dumping hundreds of 
thousands of worker complaints into our court system is a non-
starter. It's just not a practical solution, nor is it a 
solution Mr. Walberg, to dump those types of cases in a class 
matter into our arbitral system. That arbitral system can't 
handle that influx either.
    Mr. Walberg. I guess additional evidence why unions are 
carved out of this, the cause of the outcomes.
    Mr. King. Yes.
    Mr. Walberg. Thank you, thank you for your testimony, and 
Mr. Chairman I will yield back 11 seconds.
    Chairman DeSaulnier. You're a generous man, Mr. Walberg. I 
now recognize Mr. Banks.
    Mr. Banks. Thank you, Mr. Chairman. California's AB5 law, 
better known as the Gig Worker Law, may be one of the best-
known failures of a democratic attempt to regulate labor 
standards. This law forced companies to classify independent 
contractors as employees, placing a one size fits all chain 
around their neck. Mr. King, what effect did this law have on 
California businesses?
    Mr. King. Very negative. And as you know the so-called 
worker protections are not there. And the voters in California 
resoundingly rejected it. So this also is a non-starter, and I 
see it's woven--at least there's an attempt to weave it in 
4841. Absolutely poor policy.
    Mr. Banks. Agreed. Can you tell us more about how did this 
law affect the shipping industry, and help create the supply 
chain crisis that we're experiencing today?
    Mr. King. Well, we literally have, the last I saw, hundreds 
of ships outside of Santa Barbara, outside of Long Beach, the 
entire industry of moving goods is in a State of flux. And it 
just brought litigation into those areas. A lot of the 
companies that move these goods as you know, are small and 
medium-sized companies.
    If they have to divert resources to litigate these matters, 
they have less resources to pay workers and to improve 
productivity. It's certainly an impediment in the supply chain.
    Mr. Banks. Now, Mr. King I appreciate that explanation very 
much. What's shocking to me is that despite how disruptive AB5 
was, my democrat colleagues want to expand this law nationally 
as you pointed out. The PRO Act, which unfortunately passed the 
House back in March contains provisions similar to that of AB5.
    Additionally, H.R. 4841, which is the topic of the 
discussion today, would prohibit independent contractors from 
engaging in arbitration if classified as an employee. Can you 
speak on that? On the disastrous effects of that, and that the 
PRO Act would have for labor standards if they're signed into 
law.
    Mr. King. It's an excellent question. The whole issue of 
classification, independent contractor status is quite complex 
in many scenarios, only to be dealt with separate hearings, 
separate proposals, separate discussion.
    Beyond that the Federal Arbitration Act, I would at least 
concede in part was designed to settle disputes between 
merchants, between third parties. Why should we take that well-
known, well-established procedure where an employer and a 
third-party merchant or supplier or vendor cannot enter into 
dispute resolution?
    And certainly there even if you concede there's some uneven 
bargaining power on how these agreements are established, which 
has long since passed with procedural safeguards being adopted, 
but even if you go there, this is an area where you certainly 
ought to preserve arbitrable pre-dispute procedures.
    And the funny thing I note here, our entire juris prudence 
system is built on procedures being agreed upon in advance. I 
can't go into Court and ask the Court well, let's change the 
rules. We'd like to negotiate a different set of rules. The 
Civil Rules of Procedure are there in place, so are the 
American Arbitration Act Procedures.
    So it's a misnomer to say these procedures shouldn't be 
agreed upon in advance. That's the way the system has worked 
and should work.
    Mr. Banks. And finally Mr. King, can you elaborate more 
with that on the effect that H.R. 4841 would have on 
contractors?
    Mr. King. Well, it turns upside down the whole definition 
of independent contractor worker employee. As I read the bill 
everybody is an employee. Everybody that even has an agreement 
to supply goods and services at arms-length has to be brought 
into an employee status, and therefore no pre-dispute 
arbitration agreement ever could be entered into. That makes 
absolutely no good policy sense or common sense.
    As I said in the outset of my remarks. I'm sure I could sit 
down with Professor Colvin at an arm's length and negotiate a 
good, pre-dispute arbitration procedure that has procedural 
safeguards, no secrecy. That's foreclosed. So whether it be 
independent contractors or anyone else, this bill goes way too 
far.
    Mr. Banks. Agreed. It seems enormously dangerous. With that 
Mr. Chairman I yield back.
    Chairman DeSaulnier. Thank you, Mr. Banks. I just want to 
make, if anybody listening has a question, I was referring to a 
separate bill, assembly bill AB51 that dealt directly with 
arbitration. AB5 I'm very familiar with as a former Chair of 
the Senate Labor Committee in California, but I just want to 
clarify that. They are two separate bills, not that Mr. Banks 
was inferring that, I just want to clarify for the record. Mrs. 
Harshbarger you're next for five minutes.
    Mrs. Harshbarger. OK. Thank you, Chairman and Ranking 
Member, and thank you for the witnesses for being here today. 
Mr. King I'm going to read part of your testimony. It says, 
``Arbitration is usually less expensive and faster than 
litigation. It can have similar procedural and evidentiary 
rules. It normally minimizes hostility and is less disruptive 
of ongoing and future business dealings among the parties.
    It's more flexible in regard to scheduling of times and 
places appearing in discovery devices.'' And you know I've been 
a business owner for over 30 years, and you know if it were me, 
I would absolutely want to sit down with an employee and have 
an arbitrator because of the timeframe, the hostility factor is 
huge.
    Earlier this Congress, as Representative Banks said, House 
democrats passed H.R. 842, and that's the Protecting the Right 
to Organize after the PRO Act. And it is a bill which bans 
arbitration agreements to settle disputes between workers and 
employees, and it allows the NLRB to impose large, monetary 
penalties, up to $100,000.00 on employers for unfair labor 
practices, and that includes violations of the bill's 
prohibition on arbitration agreements.
    These huge financial penalties in the Pro Act are 
consistent. I mean that would devaState a business sir is what 
I'm trying to say. $100,000.00 fine would devaState a business, 
and I guess what is your opinion on what would happen if these 
were consistently applied because there wasn't arbitration?
    Mr. King. Excellent question. The PRO Act contains many 
toxic provisions for business, and you just identified one of 
the central ones. That's apparently still pending in the so-
called budget reconciliation discussions. What as a practical 
matter can happen, and will happen, is that unfair labor 
practice charges without any foundation in many cases will be 
filed against medium and small employers, particularly.
    They don't have the financial ability to defend their 
position. And if the National Labor Relations Board then finds 
an objectionable conduct unfair labor practice has occurred, 
then the business is subject to hundreds of thousands of 
dollars of potential fines, including representatives on the 
Board, Chief Human Resource Officers, owners of the business.
    The Wagner Act, which is the predecessor of the National 
Labor Relations Act passed in 1935, never envisioned the 
National Labor Relations Act to be this type of statute. It's 
been throughout its history a remedial statute. Both Democrat 
and Republican Congresses have accepted that.
    The PRO Act is a substantial unfortunately overreach and 
the civil penalties you just mentioned are totally unneeded.
    Mrs. Harshbarger. Well, I don't think a small business 
could stay in business very long if that happened, and you know 
when you look at the Supreme Court case Epic Systems, and they 
encourage arbitration initially. You know I'm assume once you 
do the arbitration and you work everything out, what's the 
timeframe generally that a case is dismissed, or penalties 
taken care of?
    I mean is that a reasonable amount of time during an 
arbitration? Is there you know a standard amount of time?
    Mr. King. Most arbitrations again in the workplace as I 
note in my opening comments are generally involving relatively 
minor disputes frankly.
    Mrs. Harshbarger. Yes.
    Mr. King. Was I paid properly? Did I get my vacation when I 
should have? Did I get my job letting rights? Those can, and 
are resolved quickly, in many cases less than 180 days from 
time. The arbitrator is selected and tell her or his award.
    Correspondingly in the judicial area, and I just saw stats 
in this yesterday. You're talking 560 days at a minimum in many 
cases, and if you are in a class action you don't even get to 
the merits of the litigation until sometimes years because 
procedural issues of technicality, numerosity, et cetera are 
litigated.
    So much quicker, absolutely no case that I can see out 
there that's at least supportable would suggest that the court 
system is more efficient, just the opposite.
    Mrs. Harshbarger. Well I agree. If you have--in my 
experience as a business owner you have 10 different attorneys, 
you're going to get 10 different answers, but you're going to 
be billed 10 times too. Just FYI. So I appreciate you, and I 
have a little bit of time left, and I yield back.
    Chairman DeSaulnier. Thank you, Congresswoman. You're 
learning from Mr. Walberg. Representative Fitzgerald your time 
is here.
    Mr. Fitzgerald. Thank you, Mr. Chairman. Mr. King instead 
of setting one standard and having everyone play by the same 
rules, I think where my colleagues across the aisle are, 
they've singled out the unions for favorable treatment. 
Yesterday a very similar bill came forward in Judiciary, of 
which I'm a Member, and I offered an amendment.
    In that markup in the Judiciary Committee the amendment was 
aimed directly at the FAIR Act that would remove the exemption 
for unions in a bill that would otherwise ban the pre-dispute 
arbitration. You know clearly, it's a union carve-out. The 
legislation bans the pre-dispute arbitration for non-union 
employees while preserving these benefits for the union 
employees.
    The discrepancy, it just doesn't make any sense other than 
you know trying to appease the unions like I said. I mean but 
legally this has to make this entire area of law, a little more 
vulnerable I would say, and you know it's probably not a wise 
move when you're talking about this area of statute. Would you 
agree or disagree, or what are your thoughts on that?
    Mr. King. Well, good points Mr. Fitzgerald. It's 
intellectually insupportable. I don't know how one could say 
that a union and a corporation, an employer, should be able to 
negotiate pre-dispute arbitrable procedures and also ban class 
actions if they so agree, but yet say no, that can't occur 
anywhere else in the world.
    If it's inherently illegal, unconscionable, unacceptable as 
a general premise, why isn't that also applicable in the 
unionized environment? You just can't reconcile those two 
points of view. And to somehow suggest that, as I said earlier, 
that a union and employer negotiate at arms-length 
sophisticated complex, arbitrable agreements, that's just not 
reality.
    What those agreements look like are the same as we see in 
the non-union deal. So there ought to be a level playing field 
here. As noted by the previous questions, this whole attempt to 
fine employers, to force employers into dealing against the 
will often of their employees in a union environment is just a 
pressure play to chill the rights of employers, and to cause 
them to have all kinds of litigation and regulatory problems.
    It's not a playing field that's fair.
    Mr. Fitzgerald. Very good. Thank you. Just one other quick 
question. So the other thing about H.R. 4841 is it applies to 
employees of the employer, as well as independent contractors. 
And in my estimation, you know I think that this will have a 
direct effect on for the most part, entrepreneurs, or people 
that are trying to do a startup. And I was wondering I you 
could make a brief comment on that part as well.
    Mr. King. Oh absolutely. So it's an end around of an 
intelligent thoughtful discussion about whether an individual 
is an employee, or an independent contractor, a merchant, or a 
third party. And those are all entirely separate issues. If you 
foreclose merchant's third parties and other employers, the 
user employer, from negotiating previous agreements, and you 
prohibit them from carving out class actions, you're forcing 
everybody into the Courts and primarily into class action 
litigation.
    That makes no policy sense, it's inefficient, it's the 
wrong way to go to about that discussion.
    Mr. Fitzgerald. Very good. Thank you, Mr. Chair, and I 
would yield back.
    Chairman DeSaulnier. Thank you, Mr. Fitzgerald. We'll now 
recognize Congresswoman Miller for five minutes.
    Mrs. Miller. Thank you, Chairman DeSaulnier, Ranking Member 
Allen, and all the witnesses. While the Committee democrats and 
those that object to arbitration agreements in general argue 
that their intention is to get better outcomes for claimants 
through litigation--that is not the answer.
    Mr. King in your testimony you mentioned how proponents of 
banning arbitration in this hearing are citing faulty studies. 
You cite studies that show only 13 percent of class action 
lawsuits result in payout, and the average award is about 
$32.00, while plaintiff's attorneys got about 1 million. Would 
you please elaborate on how the studies you cite are correct, 
and how others that are cited are misleading?
    Mr. King. Thank you, Congressman Miller. First of all as I 
mentioned the recent student by the Plaintiff Trial Lawyers 
Association counted all settlements as losses for workers. 
That's inherently misleading. It's really a disservice to this 
discussion.
    Second, in some of the statistics we've seen, and I 
certainly respect Cornell University. It's my alma mater, my 
lawsuit, but in all due respect to the ROI studies, they're 
comparing jury awards to standard, what I would call run of the 
mill arbitral workplace settlements. You just can't do that. 
That's as I said apples and zebras.
    And the disparity Congressman Miller between what the 
claimant is getting in court, compared to what the claimant is 
getting in arbitration, the figures we are citing is as close 
as possible to a real-world apples to apples study. And study 
after study, indeed the updated study that I just saw 
yesterday, refutes entirely this suggesting of that Plaintiffs 
and workers are doing better in the court system.
    And where the real reward in that court award is going, as 
inherent in your question, is to the trial lawyer, not to the 
consumer, not to the worker.
    Mrs. Miller. Thank you that was interesting, especially in 
light of the fact I'm reading a book called ``How to Lie with 
Statistics.'' Mr. King your written statement quotes Supreme 
Court Justice Breyer on the advantages of arbitration. Is 
Justice Breyer's statement of support for the arbitration 
process unusual? Have other judges across the ideological 
spectrum made similar statements?
    Mr. King. Absolutely. He's not alone. I would hardly label 
Justice Breyer an outlier, but Justice White, Justice Kennedy, 
Justice Kagan, and many other Justices of varying philosophies 
have clearly articulated in their written decisions that 
arbitration is the preferable way to proceed and is the 
congressional intent behind the Federal Arbitration Act. It is 
the law of the land.
    But even if you rejected those very thoughtful opinions by 
very intelligent people, and even if you reject decades of 
court case law as Mr. Allen said at the outset--our court 
system and arbitration system is not equipped to handle 
hundreds of thousands of disputes that would be put into that 
system. That's not workable. So let's do a reality check here.
    If you really want to get to the heart of this issue let's 
encourage employers, workers, even unions to have alternative 
dispute resolution procedures, settle these matters in the 
workplace, informally, thoughtfully, and expeditiously.
    Mrs. Miller. Thank you. That's good information to know. 
And finally Mr. King as I speak with my constituents, the most 
frequent thing that I hear is that they're having a hard time 
retaining and finding new employees. If we were to ban 
arbitration agreements, how would this harm employment?
    Mr. King. Well, you know it's interesting. We hear this 
disparity of bargaining argument that workers are being forced 
to accept these agreements. Well first of all, more and more 
companies are making them optional, and they're not being 
forced as suggested in testimony, on workers.
    Second, workers in this economy particularly will go 
somewhere else if they find the system to be inherently unfair. 
And third, given our platform economy, if word is out on the 
street that employer access unfairly treating its workers in 
so-called forced arbitrations, they'll go somewhere else to 
work.
    So this worker shortage is having a very interesting impact 
upon this entire discussion. But in our whole system, I mean 
workers don't have an opportunity to renegotiate the Civil 
Rules of Procedure in the courts, they don't have the ability 
to renegotiate arbitration rules and regulations by the 
American Arbitration Association. So this whole discussion is 
off kilter in that regard.
    Mrs. Miller. Thank you. Thank you again to all of our 
witnesses, and I yield back.
    Chairman DeSaulnier. Thank you, Congresswoman Miller. I now 
recognize Congressman Mrvan for five minutes.
    Mr. Mrvan. Congressman, if I could I just if I could be 
recognized for five minutes in about 2 minutes, I'd greatly 
appreciate it.
    Chairman DeSaulnier. I'm sure the Ranking Member of the 
Full Committee would love to go now if that's appropriate, Ms. 
Foxx get ready to go. Your five minutes are here. I always want 
to show you the deference you so richly deserve, Ranking 
Member.
    Ms. Foxx. Thank you, so much Mr. Chairman. I always love 
seeing you on the screen. I'd like to see you in person better, 
but I love seeing you on the screen. Thank you so much. Mr. 
King for over 80 years Congress has struck a careful balance in 
Federal labor law with respect to the interest of workers, 
employers, and labor organizations, however H.R. 4841 
encourages adversary class action lawsuits between workers and 
employers, while preserving labor union access to arbitration.
    Is H.R. 4841 consistent with the balanced approach of the 
National Labor Relations Act?
    Mr. King. Dr. Foxx, very nice to see you again, albeit 
virtually.
    Ms. Foxx. Thank you.
    Mr. King. There is no balance as we just discussed, but I 
don't know how you intellectually or classically defend a carve 
out for union agreements in this area. If you accept the 
premise of 4841 that previous arbitration is completely bad and 
should never be utilized, then the same ought to be applicable 
in the union environment, but of course that's a misnomer and a 
false premise to start out with.
    And to say that you can never have a class action 
abridgement or prohibition in the non-union sector, but yet you 
could have it in the union sector, that's again inherently 
inconsistent and not intellectually supportable.
    Ms. Foxx. Thank you very much. Mr. King in the Epic 
System's decision in 2018, Supreme Court found that the NLRA 
and the Federal Arbitration Act are not in conflict and that 
workers ability to organize unions and collectively bargain 
does not guarantee the ability to litigate as a collective 
entity.
    In your view is this finding, correct? And what 
implications does it have for the NLRA?
    Mr. King. Well, I think it's an absolutely correct 
decision. It codified decades of the Supreme Court case law 
that as we just established had various judicial philosophies 
in those previous decisions. The Wagner Act, the predecessor of 
the National Relations Act was passed in 1925, excuse me 1935.
    The Federal Arbitration Act was 1925, so the authors of the 
NLRA and the Wagner Act in 35, they knew of the Federal 
Arbitration Act. If they had wished to include class action 
protection in the National Relations Act, they certainty could 
have done so. They did not do so. The National Relations Act as 
the Supreme Court said in Epic, doesn't have any provision that 
guarantees class action litigation.
    Ms. Foxx. Thank you. You mentioned in your testimony H.R. 
4841 creates new unfair labor practice charges against 
employers, and that this is even more troubling in view of the 
democrats impending budget reconciliation bill. When this 
legislative monstrosity was considered by the Education and 
Labor Committee in September, the Democrats included an 
appalling provision which for the first time, even under the 
NLRA creates massive civil, monetary penalties against 
employers and corporate officers.
    Can you elaborate quickly please on why this combination is 
so unprecedented and dangerous?
    Mr. King. The National Relations Act in its many decades of 
history never has included fines against employers. This is an 
attempt to chill employers, to exercise their rights, it's also 
an attempt to chill employers to respond to unfounded unfair 
labor practice charges. Small and medium-sized businesses are 
going to be put in a very difficult position. It is inherently 
not fair. It's certainly not needed. It's an overreach.
    Ms. Foxx. Thank you. Mr. King when Congress considers a 
piece of legislation, we should be absolutely clear about how 
the legislation would affect the American people. Your 
testimony states that arbitration is an effective and proven 
method for resolving workplace disputes.
    Would you elaborate on the advantages of arbitration for 
workers any more than you might need to based on your previous 
testimony?
    Mr. King. It's quicker. It's more informal as we discussed 
earlier. It forces the employer and the employee to sit down 
with one another. And you know what Dr. Foxx as a practical 
matter what really happens here, let's put aside all this 
philosophical approach. It forces the parties to come to an 
agreement.
    And in my experience over 50 years, there's a very high 
sell of the break, not only an arbitrable system, but also in 
the Courts. The particularly informal arbitration procedures, 
pre-dispute arbitrations lead to settlements. And that's what 
we all ought to strive for here.
    Ms. Foxx. Thank you. And Mr. Chairman thank you again for 
letting me help out Mr. Mrvan as he was walking over. I see the 
technique he used. I thought I was going to be in that position 
too of running over here. He and I were just on the floor, so I 
ran like crazy to get over here. I move a lot faster than he 
does by the way, so anyway, I'm glad we're able to--I like him, 
and I like you, thank you Mr. Chairman. I yield back.
    Chairman DeSaulnier. Thank you, Congresswoman Foxx, the 
most charming Member. Mr. King I would agree with you on this. 
Congresswoman Foxx is always best in person. Congressman Mrvan, 
five minutes is yours.
    Mr. Mrvan. Thank you, Chairman. And Congresswoman Foxx I 
played in the football game yesterday. I can barely blink 
without being in pain, so that's why you beat me. But 
respectfully I thank you, everyone, for the opportunity. 
Professor Colvin can you explain the difference between 
individual forced arbitration and the forms of arbitration that 
many unions require through collective bargaining? Why is 
arbitration more appropriate when it is a part of collective 
bargaining agreements?
    Mr. Colvin. It's a great question. There's a fundamental 
difference to how arbitration operates in the collective 
bargain contracts, what we call labor arbitration. It's a 
system that's been around since the 30's, 40's, that has been 
very successful for ensuring collective agreements are 
enforced, and as an alternative to strikes in the workplace.
    What's really different there is that the system operates 
with two sophisticated parties--two repeat players, one on each 
side. What that means is that the arbitrators are responsible 
to both parties. The cadre of labor arbitrators who decide 
these cases are widely respected by both sides, that's why the 
system works. That's what's different on the forced arbitration 
side where you have on one side large, sophisticated 
corporations, and on the other side individual employees who 
are not repeat players.
    They don't have the same engagement, same ability to hold 
the system to account, and what we see is much more variation 
across arbitrators in making decisions on the forced 
arbitration aside, it's not consistent the way it is in labor 
arbitration.
    The other major difference, and here I have to disagree 
with what Mr. King's testimony suggested, is that the types of 
cases are really different. Labor arbitration is dealing with 
regular workplace, day to day disputes about scheduling, about 
job assignments, those kinds of things. Forced arbitration, we 
did a study where we spent time reading through a whole year's 
worth of all the forced arbitration cases decided under the 
administration of the American Arbitration Association.
    And what we found is half of them are discrimination cases, 
another 10 percent are wage an hour cases, and the rest are 
other statutes and common law claims. They're not typically 
workplace day to day problems, they're legal issues, much like 
the kinds of cases that you see in the Court system. So it's 
really different from what goes on in labor arbitration.
    The labor arbitration works well with two repeat player 
parties, and a well-established group of labor arbitrators who 
are trusted by both sides. They're really different systems.
    Mr. Mrvan. Professor Colvin in your testimony you cite 
research by Cynthia Estlund that suggests the cases are brought 
in forced arbitration at a rate of only 1 to 2 percent when 
compared with cases brought in Court. Gives the rates of forced 
arbitration you describe, is it fair to say that this means for 
a large percentage of the workforce our employment laws are 
going unenforced?
    Mr. Colvin. That's exactly right. In theory you could 
create a new dispute resolution system that was accessible to 
all workers and have a lot of claims. Professor Estlund, who 
was mentioned earlier, made this argument made this argument 
about 20 years ago, maybe we can have an arbitration system 
that looks like that.
    However, when we do the empirical research, we don't find 
that forced arbitration produces that system. There's hardly 
any cases that are small. Three quarters of the claims filed 
are over $60,000.00 claims. These are similar to the kind of 
claims that are filed in Court. They're not small claims. We 
don't see the accessibility, and the reality is if you don't 
have the accessibility, then for most American workers, you're 
not seeing their employment rights being enforced.
    Mr. Mrvan. Can you lay out the facts that make claims so 
much less likely to be brought in the forced arbitration than 
they would be if the worker had access to the Courts?
    Mr. Colvin. So one thing I think that has to be recognized 
is some of what you heard in Ms. Perez's testimony, that 
there's procedural complexity in arbitration that gets 
unrecognized. She is an individual worker without legal 
representation. It's not really possible to easily navigate 
this system. It's more complex, and it's become more complex 
over time.
    It's also the case that what you see successful in 
arbitration systems is sort of larger, higher income, you know, 
sophisticated parties with substantial resources. Those are the 
ones that succeed. By contrast, our employment laws are really 
there to try to protect the typical American worker without 
large scale resources, or sophisticated legal representation.
    You've got to protect those workers and that's the 
challenge.
    Mr. Mrvan. I thank you. With that I yield back.
    Chairman DeSaulnier. Thank you, Congressman. I don't see 
any other Members, so I want to thank all the witnesses. I 
didn't imagine being so dominated by Cornell. I felt like all 
of a sudden singing Hail, Hail, Cornell, so thank you, far 
above Cayuga's waters--I have some friends who attended.
    But I do want to thank all the witnesses. You are terrific. 
Pursuant to Committee practice materials for submission for the 
hearing record must be submitted to the Committee Clerk within 
14 days following the last day of the hearing, so by close of 
business on November 18, preferably in Microsoft Word format.
    Only a Member of the Subcommittee, or an invited witness 
may submit materials for inclusion in the hearing record, and 
the materials must address the subject matter of today's 
hearing. Please submit materials to the Committee Clerk 
electronically by emailing submissions to the 
[email protected].
    Again I want to thank the witnesses. I did want to mention 
that unfortunately some Members, particularly on our side 
weren't able to attend because they were attending memorial 
services to former Congressman Kildee from Michigan, the uncle 
of our colleague Representative Kildee who served for many 
years on this Committee, so I just wanted to let people know 
that you know that many of us wished we could have been there.
    And again, one last time thank you all. Even the people who 
aren't affiliated with Cornell for participating as witnesses 
today. If we have other additional questions for you, we may 
ask that you please respond to those questions in writing. The 
hearing record will be held open for 14 days in order to 
receive those responses.
    I want to remind my colleagues that pursuant to Committee 
practice witness questions for the hearing record must be 
submitted to the Majority Committee Staff or Committee Clerk 
within 7 days. The questions submitted must address the subject 
matter of the hearing.
    I now want to recognize our distinguished Ranking Member 
for a closing statement.
    Mr. Allen. Thank you, Mr. Chairman, and my condolences to 
Dan and the entire Kildee family as I heard also about the 
memorial service this morning at our prayer breakfast. As we 
heard today, H.R. 4841 will only add to the challenges that job 
creators and American workers are already facing in this 
struggling economy.
    We've had great testimony by our witnesses, and I thank all 
of our witnesses for participating today in this important 
hearing. Based on my experience as a business owner, I know 
that banning the use of arbitration will unfairly penalize 
individual employees, and employers, by delaying resolutions to 
their workplace disputes.
    Arbitration is a proven method for solving employment 
issues. It is often a lot quicker and less expensive than Court 
battles resulting in swifter justice for proven incidents of 
wrongdoing. H.R. 4841 is contradictory in its effort to ban 
pre-dispute arbitration and class action waivers between 
employees and employers because the bill still allows employers 
and unions to continue negotiating agreements through the same 
process.
    It's blatantly a one-sided approach, it allows unions a 
huge advantage which is in conflict with principles of equal 
treatment. H.R. 4841 also unfairly penalizes independent 
contractors and fails to recognize that they are entrepreneurs 
who set their own hours and earnings.
    By putting independent contractors in the same category as 
salaried or hourly employees, H.R. 4841 will decrease 
opportunities for these American workers at the very same time 
that flexible employment options are needed the most. Forced 
lockdowns, the supply chain crisis, rising inflation and worker 
shortages are already wrecking our economy.
    This legislation if signed into law could be the nail in 
the coffin for many struggling job creators. As I stated in my 
opening statement the only thing H.R. 4841 is good for is 
enriching trial lawyers. The legislation will result in ongoing 
class action lawsuits, leaving many worker's claims unresolved 
due to the costly and time-consuming nature of litigation.
    I'd like to again thank our witnesses for participating 
today, and with that Mr. Chairman I yield back.
    Chairman DeSaulnier. Thank you, Mr. Allen. I really 
appreciate that. Again, I want to thank all my colleagues, 
thank you for adhering to the five-minute rule, and the 
witnesses, and as a former employer for many, many years, 
meeting a payroll as Mr. Allen and others have said, what I 
hope for is a structure that's balanced, and I think we all 
agree on that.
    Our perspectives may be different, and on one of those 
occasions I agree with the Hoover Institute person, Francis 
Fukuyama, that it's best if we avoid this in the employer/
employee relationship if both sides treat each other with 
respect, and not get into those situations as he enumerated in 
his book Trust, that's probably the most efficient way.
    But knowing human nature that's not always possible, and 
that's why I believe strongly in this bill, but value the 
perspectives, and hope to continue the conversation. Now I'd 
like to recognize myself for a closing statement.
    Today we highlighted the importance of passing legislative 
solutions to end forced arbitration and ensure that workers 
have a fair shot at securing justice. Access to the American 
legal system is an essential pillar to our democracy. 
Unfortunately for decades employees have been forced, often 
times, into signing arbitration clauses that close the doors to 
the Courtroom.
    As a result, employers--some employers duck litigation, and 
evade accountability at the expense of worker's rights. 
Congress must pass, in my view, the Restoring Justice for 
Workers Act to ensure that workers can ban together to hold 
employers accountable for wage theft, harassment, 
discrimination, and other violations of essential workplace 
positions.
    I look forward to working with my colleagues on both sides 
of the aisle to better protect workers. Thank you again for our 
witnesses. If there's no further business without objection the 
Subcommittee stands adjourned. Thanks again.
    [Additional submissions by Mr. Allen follow:]
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
    
    [Questions submitted for the record and the responses by 
Mr. Colvin follow:]
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    [Questions submitted for the record and the responses by 
Ms. Kotegal follow:]
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    [Whereupon, at 11:56 a.m., the Subcommittee adjourned.]

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