[Congressional Record Volume 140, Number 116 (Wednesday, August 17, 1994)]
[Extensions of Remarks]
[Page E]
From the Congressional Record Online through the Government Printing Office [www.gpo.gov]


[Congressional Record: August 17, 1994]
From the Congressional Record Online via GPO Access [wais.access.gpo.gov]

 
   INTRODUCTION OF THE CIVIL RIGHTS PROCEDURES PROTECTION ACT OF 1994

                                 ______


                         HON. EDWARD J. MARKEY

                            of massachusetts

                    in the house of representatives

                       Wednesday, August 17, 1994

  Mr. MARKEY. Mr. Speaker, today I am introducing, along with 
Congresswomen Schroeder and Margolies-Mezvinsky, legislation that 
responds to a growing threat to American employees' civil rights. 
Specifically, our bill would prevent employers from forcing their 
employees to give up their right to pursue employment discrimination 
and sexual harassment claims in courts of law. This bill responds to 
the burgeoning practice, engaged in most prominently by the securities 
industry, but also increasingly relied on by employers in information 
technology and other fields, of compelling employees to sign contracts 
that require all employee-employer disputes to be resolved through 
binding arbitration. This practice has resulted in an important--and, 
by all accounts, growing--segment of corporate America simply opting 
out of the anti-discrimination laws on the books.
  Signing away one's right to pursue a discrimination claim in court 
may be a condition of employment or advancement, or may be required in 
order to gain certain employee benefits such as stock options. In the 
securities industry, securities firms require that certain employees, 
as a condition of their employment, register with one or more stock 
exchanges, thus becoming registered representatives. As part of that 
process, they must submit a so-called U-4 application, which is a 
standard contract used by each of the securities exchanges. The U-4 
agreement requires, somewhat elliptically, that all disputes or 
controversies with the employee's firm be arbitrated if the rules of 
the exchange with which the employee is registered requires them to be 
arbitrated. The exchanges, in turn, have rules that require registered 
representatives and member firms to arbitrate all controversies that 
arise between them.
  Thus, in order for brokers to have a license to do business as 
employees of brokerage houses, they must sign or resign. The employee 
has no choice in the matter, and indeed, even if he or she were to have 
offers of employment from more than one firm, shopping around to find 
one that does not require arbitration would be to no avail: it is an 
industry-wide practice, with no opportunity for individual 
modification.
  This practice, however, flies in the face of the spirit of the 
antidiscrimination laws passed by Congress and on the books of States 
and municipalities across the country. When Congress passed the various 
civil rights and fair employment practices laws, it established access 
to the courts as the means of enforcing the fundamental rights those 
laws sought to safeguard. The judiciary is the objective arbiter of 
these rights; without access to the courts, the employee has no clear 
means of establishing them. The employer, in turn, has less incentive 
to follow the letter of the law. The existence of an unassailably 
neutral forum in which to vindicate these basic rights is therefore 
critical to their vitality. For private employers to forcibly interpose 
instead a substitute forum--with a distinct set of procedures, no 
access to a jury, no right to appeal, and no requirement that the 
arbitrators even follow the letter of the law in rendering their 
decision--constitutes a constructive denial of the right to a 
nondiscriminatory workplace.

  No industry has practiced such constructive denial of rights as 
consistently as the securities industry. Not only is the practice 
pervasive, but the impartial and independent judicial forum envisioned 
by Congress is exchanged for a captive one where neutrality and 
independence are in serious doubt. Securities industry arbitration is 
run by the industry selfregulatory organizations [SRO's], with industry 
members represented on each arbitration panel, and with arbitrators 
with little or no expertise in the area of employment law sitting in 
exclusive judgment. As the GAO discovered in its recent report to my 
subcommittee, the vast majority of arbitrators at the major SRO's are 
white males, above the age of 60. At best, such a setting has the 
appearance of unfairness; at worst, it is a tainted forum in which an 
employee can never be guaranteed a truly objective hearing.
  Procedurally, securities arbitration is a far cry from adjudication, 
with substantial limitations on discovery and no obligation on the part 
of the arbitrators to even explain the reasons for the final outcome. 
The secretive nature of the proceedings, combined with arbitrators' 
ability to follow whim rather than precedent, and not have to justify 
their decision either in writing or to an appellate tribunal, result in 
a system poorly adapted to the vindication of fundamental civil rights. 
Moreover, the broad public policy purpose behind individual enforcement 
of the civil rights laws is undermined. In addition to their remedial 
function, the antidiscrimination laws serve an important deterrent 
function. This purpose requires both a public forum and one that can 
bind employers through precedent, the fore of law, and moral suasion. 
Forcible industry-sponsored arbitration provides none of those.
  At its best, arbitration is an efficient and low-cost alternative to 
the courtroom. If conducted fairly, both parties to the arbitration 
proceeding can benefit. But even at its best, arbitration is not suited 
to disputes over fundamental rights unless both parties, once a claim 
has arisen, decide that it is an appropriate means of resolving the 
dispute. The bill we are introducing today would invalidate all 
predispute agreements to arbitrate claims raised under Title VII of the 
Civil Rights Act of 1964; the Age Discrimination in Employment Act of 
1967; the Rehabilitation Act of 1973; the Americans with Disabilities 
Act of 1990; section 1977 of the Revised Statutes of the United States; 
the Equal Pay Act of 1963; and the Family and Medical Leave Act of 
1993. It would also amend the Federal Arbitration Act by rendering it 
inapplicable with respect to a Federal, State, or local claim of 
unlawful discrimination based on race, color, religion, national 
origin, age, or disability. Together, these changes will ensure that 
all employees can enjoy the fundamental protections offered by the 
civil rights laws.

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