Can employers require mandated arbitration in employee disputes?

In response to months of pressure from employees, Google Inc. said last week it will no longer require employees to settle disputes with the company through arbitration. The change, which will take effect March 21, 2019, will apply to current and future employees.

Last year, Google said it would end mandatory arbitration — which requires employees to settle their disputes privately and outside of court — for sexual harassment and assault cases. It also said it wouldn’t require arbitration in agreements with contract workers, though it wouldn’t require vendors to change their proprietary contracts.

Read: Google walkout protests mishandled sexual harassment

In November 2018, thousands of Google employees from around the world briefly walked off the job to protest what they believed to be the technology giant’s mishandling of sexual misconduct allegations against executives.

“The real question now is whether an agreement like that in Canada will even be legal to begin with, whereas in the States, generally, agreements like that are legal,” says Lior Samfiru, an employment lawyer and partner at Samfiru Tumarkin LLP. “In Canada, there’s a real question as to whether they are. And a lot of this stems from the very recent Court of Appeal decision in the Uber case where the question before the Court of Appeal in Ontario was whether or not an arbitration clause is enforceable or is it in breach of the Employment Standards Act.”

The court found it was in breach of the Employment Standards Act and unenforceable in any event, notes Samfiru. “That’s an important thing to understand, because employers that use those in Canada — and it could be American companies but they use them for their Canadian employees — may actually find that irrespective of anyone’s intention, they may actually be illegal and unenforceable.”

Read: A workplace guide for the #MeToo era

An arbitration clause that tries to impose a process requiring people to go to arbitration instead of having access to the courts or the Ministry of Labour isn’t enforceable, says Samfiru, because under statute, employees have a right to make that choice — they can go to court and start legal action and they can file a complaint with the Ministry of Labour. “So if we take away those rights, we’re doing something illegal,” he says.

“Right off the bat, that could be an issue of enforceability. Now, employers could try to draft these arbitration clauses in ways that get around this by saying anything that’s otherwise covered by employment standards, legislation, you can go to court, and other things, such as harassment and discrimination, you have to go to arbitration.”

Read: Lessons from a workplace harassment investigation gone wrong

Samfiru sees this as problematic, though, especially in the age of the of the #MeToo movement, where employers could be perceived to be sweeping issues under the rug or seeking to avoid accountability. “In the view of the public, that’s not going to be acceptable. It’s bad practice to do that, to impose a confidential process on employees, a costly process that can’t really be appealed by employees. This is not a good idea, both legally and from a public relations standpoint.”