These Furloughed Workers Must Sign Arbitration Agreements To Get Their Jobs Back

Jana Alexander was furloughed from her job at The Container Store when the pandemic began in early spring. With the economy reopening, the company recently invited her back to her old position at her store in Southlake, Texas. But there was a catch.

Alexander would have to sign an arbitration agreement, giving up her right to sue The Container Store in court if she was mistreated. Her welcome-back letter made clear she had little choice in the matter if she wanted to draw a paycheck: “This job offer is contingent upon agreeing to our Mutual Agreement to Arbitrate which we will ask you to sign on your first day on the Payroll website.”

Alexander, 61, refused to return to work because her husband has lung cancer and is at high risk of contracting the coronavirus. But she said her colleagues, many of them women in their 60s, would have little choice but to sign away their legal rights to avoid financial ruin.

“I will tell you many of the older women ― and that’s kind of the profile ― they were desperate for the income,” said Alexander. “I think they’re in a situation where they’re saying yes to whatever they have to in order to get a paycheck.”

Many workers would no doubt feel pressured to agree to arbitration. The form letter to Alexander stated that if she didn’t report to work as scheduled, the company “will report your termination as a voluntary resignation” to the state, possibly jeopardizing unemployment benefits.

There may be no better time for employers to seek concessions from their workers, be it a pay cut or an agreement to arbitrate all disputes. With the unemployment rate still above 11% in June, most workers will take what they can get ― especially as Congress appears likely to pull back on unemployment benefits and other stimulus aid.  

The Container Store, which is based in Texas, told HuffPost that it had planned to roll out the new arbitration agreement before the pandemic hit, and that it applies to all company employees, not just those who had been furloughed due to coronavirus-related store closures. The agreement viewed by HuffPost was dated May 2020.

When workers sign arbitration agreements, they agree not to take common workplace claims like wage theft or discrimination to court. Instead they must go before an arbitrator, a venue where the employer holds certain advantages. Many agreements, including The Container Store’s, also prevent workers from joining in class-action lawsuits, reducing the collective power they would wield if they banded together.

Such agreements could also complicate efforts to file wrongful death suits stemming from the pandemic. For instance, Massachusetts’ high court ruled in February that the relative of a nursing home resident who died could not sue the nursing home because the resident had signed an arbitration agreement. 

Many companies are hoping to insulate themselves from liability as workers return to their jobs and face unprecedented health hazards due to the coronavirus. Republicans in Congress are hoping to shield employers from coronavirus-related liability in new legislation.

HUFFPOST READERS: Have you been ask to make concessions at work to keep your job during the pandemic? Email us about it.

By requiring its workers to agree to arbitration, The Container Store is just following a national trend. A 2018 study by the Economic Policy Institute found that more than half of workers are now subject to such agreements, compared to just 2% in 1992. The contracts have likely become even more widespread since the Supreme Court’s conservative majority gave employers the green light to use them in a landmark ruling in May 2018.

But Terri Gerstein, a labor law expert at Harvard Law School, said the situation at The Container Store underscores an absurd assumption in that ruling: that such agreements are mutually agreed upon and not coercive.

Curbside pickup at a Container Store location in New York in June. Container Store employees have to sign arbitration agreements if they want to go back to work after being furloughed.

“Arbitration agreements aren’t agreements in any sense of the word, because workers don’t have a choice about signing them: If you don’t sign, you can’t get the job,” Gerstein said in an email. “What options do workers have but to sign, especially now, in light of high unemployment rates, as well as the likelihood of losing unemployment insurance if they turn down a job.”

She added, “Employers shouldn’t use … the post-furlough return to work as an opportunity to impose unfair new conditions on workers.”

Indeed, the Labor Department has issued guidance saying that not returning to work out of fear of contracting the coronavirus would make one ineligible for unemployment benefits. The agency told states to encourage employers to inform them when workers decline to return to work so their payments can be cut off. Someone’s personal circumstances, such as an elevated risk in their household, may still qualify them for benefits.

The Container Store was forced to close its stores to foot traffic in states with stay-at-home orders early in the pandemic. It shuttered the remainder of its 93 stores in April, switching to curbside pickup and a limited number of in-store appointments. The company said furloughs and pay cuts for store employees were a “difficult but necessary decision.”

Alexander said clocking back in at The Container Store was a non-starter given her husband’s preexisting conditions. Like many states in the South and West, Texas is now dealing with a surge of coronavirus cases, with more than 1,000 deaths in a recent 10-day stretch ― as many as in the preceding three months combined.

Alexander said she had the luxury of not returning to work in a pandemic because of her savings from a corporate job she left last year. She knows of at least one Container Store employee who was reluctant to sign the arbitration agreement and even consulted a lawyer about it. The employee was told she had no other option if she wanted the job.  

“She really needs the income so she signed,” Alexander said.

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