Is it unethical for a business to include an arbitration cla

Is it unethical for a business to include an arbitration clause with a class-action ban in its contracts with customers, employees, and other businesses? Discuss

Solution

The primary objective of a business is to make profits for business owners and its interest is to stay in business by any standard. Class-action is a potential risk with substantial implications for business, because of the fact that a class-action may be based on fictitious and groundless claims and attorneys use class-action as a tool of generating huge fees. The business may end up exhausting its valuable assets litigating or setting a class-action suit. The business would otherwise like to invest its assets for productive purposes. Therefore, as a mitigating measure, it is in business\' interests to incorporate a class-action ban in its contracts with customers, suppliers and employees. Such a ban prevents the affected parties from fighting the charge individually. Strictly from a legal perspective, getting employees to sign such an arbitration clause do not violate the National Labor Relations Act.

The negative implications of incorporating such a clause in the contracts is that it prevents affected parties from exercising their federal rights to fight monopolistic practices of a business. Essentially and in its earnest purpose, class-action is a means of curbing bad business practices, which affect a large number of stakeholders. So businesses may use class-action ban as a means of engaging in harmful and unethical conduct and then eliminating an important means of redressal for those harmed by such conduct of the business.

Consdering the larger implications, it is unethical for businesses to impose a ban on the customers\', business associates\' or employees\' federal rights to bring class-action with a purpose of curbing unethical and harmful conduct of business.