Arbitration clauses are coming to the forefront more and more these days. As start-ups go from being small businesses to large, valuable companies that employ thousands, it’s important to keep labor policies in mind. Like many bigger corporations, start-ups are widely instituting arbitration policies to protect themselves when they summarily fire employees based on arbitrary or unfair decision making. Arbitration may sound like “open collaboration” in solving problems, as the chief culture officer of WeWork stated in this article, but in reality, arbitration is severely tilted in the company’s favor. It prevents employees from banding together to complain, and prevents anything from really getting into court, where there’s a better chance that companies will actually be made to change their behavior. The perception of start-ups is that they’re run by young, hip entrepreneurs who care about their employees – why else would so many of these businesses be giving workers free beer, ping-pong tables and other perks? However, underneath the flashy incentives, we’re beginning to see a real return to exploitative business practices built to use employees. If you want to learn more about arbitration, start-up culture and a few specific cases where employees were treated unfairly by this system, check out the full article in The New York Times.
Photo: The Manhattan offices of WeWork, one of the highly profitable start-up companies featured in the NYT article. WeWork used arbitration to squash a class-action lawsuit concerning overtime. Photo by Cole Wilson for NYT