Rampant Sexual Abuse At Major Jeweler Highlights Failure Of Arbitration

Yet another company has been accused of rampant sexual abuse, discrimination against women, and raw abuses of power. Last week it was Uber. Today it was Sterling Jewelers, the owners of Kay Jewelers and Jared the Galleria of Jewelry.

The accusations come out of an ongoing class action arbitration that accuses Sterling of denying women equal pay and opportunities for promotions. The accusations relate to incidents from the 1990s and early 2000s. In its defense, Sterling points to the class action suit saying, “It’s critical to understand that an arbitration claim was brought against Sterling in 2008 that alleged gender discrimination in pay and promotion. None of the 69,000 class members have brought legal claims in this arbitration for sexual harassment or sexual impropriety.” That is hardly a ringing denial.

The details of some of the alleged sexual harassment and abuse are truly disgusting. One woman reported that a manager had raped one of her coworkers. Another manager promised a woman a promotion if she would have sex with him. When she declined, he continued to proposition her for years. At regular managers’ meetings, male managers preyed on their female coworkers and encouraged them to get drunk. Other men have provided statements in support of the class action stating that the culture in the company objectified women and denied them equal pay and promotions.

And, just like at Uber, it appears that Sterling’s HR department was totally dysfunctional. According to the Times, “several women said they had reported sexual harassment to their managers and the human resources department but had been ignored”.

This case also highlights the failure of the arbitration system in this country. The plaintiff’s lawyers have struggled for years to get this data out into the public eye because of the restrictions imposed in the arbitration process. Even worse, this arbitration case was brought in 2008 and is still continuing over eight years later. Part of the “benefit” of arbitration is supposed to be a relatively quick resolution of the issue. Employment contracts and most of the services we receive include a forced arbitration clause. Arbitration blatantly favors the company over the individual, with some studies showing firms winning up to 95% of the cases. In addition, the forum provides an opportunity for horrible and potentially criminal corporate activity to be “resolved” without any real damage to the company’s image or reputation. Just look at this case or how long Roger Ailes at Fox News got away with his rampant sexual abuse by settling the accusations in arbitrated settlements.

The CFPB has banned forced arbitration clauses when purchasing financial services and that ruling has been challenged and is awaiting a hearing from the Supreme Court. Hillary Clinton ran an extending that rule to virtually any service contract that consumers sign. It’s not going to happen under the Trump administration, but it really is time end the use of the forced arbitration clause.