Goldman Sachs Attempts to Use Forced Arbitration to Shut Courthouse Doors on Women Alleging Sex Discrimination

After a pair of recent court losses in its eight-year-old gender class action case, Goldman Sachs now says—for the first time—that some of the 3,000 women suing it for sex discrimination should not be in court at all because they are subject to forced arbitration clauses. Goldman’s 11th-hour claim that these women must be stripped from the class action—asserted only after it lost on appeal—smacks of retaliation and a cynical strategy to deny justice to women in this long-pending case.

Goldman banker Cristina Chen-Oster filed a complaint with the EEOC for gender bias against Goldman in 2005. In 2010, she sued on behalf of a class of women at the bank, alleging systemic and pervasive discrimination against its female professional employees, including paying women less than similarly situated men, and disproportionately evaluating and promoting men over women. The complaint notes that women at the bank experience “gender bias and a ‘boys club’ atmosphere; the sexualization of women, and an uncorrected culture of sexual harassment and assault.” A U.S. district court judge in New York certified the class of women suing the bank, and Goldman appealed that ruling to the Second Circuit. It lost, and now—for the first time—it raises the arbitration defense, claiming that these women have signed fine-print clauses waiving their right to sue in court.

Millions of workers in the United States are subject to forced arbitration clauses that bar them from suing their employers. Instead, they are forced to bring all of their workplace claims—including claims like the ones here for sex discrimination—to a private and usually confidential arbitration. More and more of the “agreements” forbid collective and class arbitrations, meaning that workers are forced to go it alone in arbitration. In other words, instead of being able to join with the other women in the workplace and claim gender discrimination, women are isolated and forced to sue one by one.

Employees covered by forced arbitration agreements often cannot get counsel to represent them, especially if they are subject to a class or collective waiver. Faced with the prospect of going it alone against their employer without representation, 98 percent of employees abandon their claims.[1] The few that do move forward are often required to sign confidentiality agreements, allowing companies to avoid deeper accountability for repeat violations.

The rise of arbitration provisions is directly related to the widespread lack of accountability by employers. The #MeToo movement was launched in part after the examples of the Weinstein Company and Fox News private arbitrations kept pernicious cultures away from public and judicial oversight.

Forced arbitration agreements cover 60 million workers nationwide and are most common in low-wage workplaces, such as fast food and retail, and in industries that disproportionately employ women and African-American workers, such as healthcare and education.

We will likely see more corporate use of forced arbitration agreements, in light of the U.S. Supreme Court’s holding in Epic Systems v. Lewis that employers’ imposition of forced arbitration agreements with collective and class waivers does not violate the National Labor Relations Act.

But, actions like Goldman Sachs go beyond these coercive waivers, and cannot be acceptable under basic notions of fairness, ethics, and the law.


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Endnotes

[1] See Cynthia Estlund, The Black Hole of Mandatory Arbitration, 96 N.C. L. REV. 679, 696 (2018)

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