Guitar Center Tells Employees To Sign Arbitration Agreements Or Lose Their Jobs

Employees of the music equipment retailer Guitar Center have been told they must sign mandatory arbitration agreements or they will lose their jobs.

The agreement, a copy of which was obtained by The Huffington Post, forces employees to relinquish their rights to sue the company in class action lawsuits over wage violations, workplace discrimination and unjust firings, among other disputes.

Sean Lynch, a sales employee at the company’s Las Vegas store, said he and his colleagues were told they must sign the agreement by end of day Friday or they forfeit their jobs.

“It was imposed on us and we have absolutely no choice,” Lynch told HuffPost.

Arbitration agreements have become highly controversial for the way they hamstring employees and weaken their legal power. By sending disputes to an arbitrator, they force workers to pursue their claims individually and outside of court, preempting any collective action. And even though they’re supposed to be neutral third parties, arbitrators are often cozy with the companies that workers are squaring off with, as The New York Times detailed in a recent series.

A Guitar Center spokeswoman said the company declined to comment.

Corporations are increasingly demanding that employees and consumers agree to mandatory arbitration, whether signatories realize it or not. Nowadays, the clauses are often tucked into welcome packets as boilerplate for new hires to sign. But in the case of Guitar Center, it appears the new policy is being imposed suddenly on longtime employees like Lynch, who says he’s worked for the company for seven years.

The Las Vegas resident said he and his co-workers learned about the agreements in December when they signed in to do routine computer training. The PowerPoint-style sessions are usually devoted to matters like music equipment or workplace safety, he said. But in this case, the session was all about arbitration, and why it was good for the company and the worker.

In a question-and-answer sheet on the new policy, Guitar Center says that going to an arbitrator is “less costly, less formal, friendlier and faster” than going through the courts. The document assures a “fair and impartial process,” and notes that Guitar Center will pick up the tab for the arbitration (though not for the employee’s lawyer, if he or she chooses one). The company is clear that the agreement is mandatory:

As a condition of new or continued employment, all new and current associates are required to electronically acknowledge and agree to be bound by the Arbitration Program and related agreement.

Lynch said he has been circulating a petition in his store that he intends to submit to management on Friday. He plans to sign the arbitration agreement, but not without protest. He said he can’t afford to lose his job.

“My main concern with it is that it’s ‘do it or else,'” Lynch said.

Guitar Center has been wrapped up in a nasty labor dispute with the Retail, Wholesale and Department Store Union, which provided the arbitration documents to HuffPost. In 2013, RWDSU won elections at three Guitar Center stores, including Las Vegas, but the union is still without a contract at any of them. The general counsel of the National Labor Relations Board accused the company of refusing to bargain in good faith, leading to a recent two-week trial. A decision hasn’t yet been issued.

Liz Vladeck, a lawyer with Cary Kane LLP who represents the union, said she questions the legality of Guitar Center requiring its employees to sign such a document. Although federal courts have ruled different ways on the issue, the NLRB has declared that such mandatory agreements illegally infringe on a worker’s right to “protected concerted activity” with colleagues.

While Guitar Center’s agreement says workers can still pursue certain claims, such as unemployment insurance or workers’ compensation, the language rules out a strikingly broad array of situations — including “any other violation of federal, state or local law.”

“We’re analyzing the agreement in light of the labor board’s recent cases. We’re considering filing a new charge and pursuing a new round of action,” Vladeck said. “What’s great is a lot of workers have been individually protesting. They’re organizing themselves.”

More on HuffPost:

Retailers Closing The Most Stores

Retailers Closing The Most Stores

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1. Abercrombie & Fitch
Abercrombie & Fitch first announced its plans to close 180 stores by 2015 more than two years ago. In its most recent quarterly report, the company said it had closed 10 stores by November of last year and would close another 40 stores by the end of its fiscal year. This total does not include the 20 stand-alone Gilly Hicks brand stores, which the company also plans to shutter this year. Abercrombie & Fitchs stock has struggled, posting one of the largest declines in the S&P 500 during 2013. To improve performance, the retailer is planning to shift marketing for its Abercrombie & Fitch to older shoppers while transforming its Hollister stores to a fast-fashion approach in line with H&M and Zara. A succession plan for CEO Mike Jeffries is also in the works. Last year, shareholders from Engaged Capital publicly campaigned for Jefferies dismissal, citing the retailers failure to adapt to fast-fashion, and Jeffries statements about excluding customers that he thought were too heavy for the brand. Read more at 24/7 Wall St.

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1. Abercrombie & Fitch
Abercrombie & Fitch first announced its plans to close 180 stores by 2015 more than two years ago. In its most recent quarterly report, the company said it had closed 10 stores by November of last year and would close another 40 stores by the end of its fiscal year. This total does not include the 20 stand-alone Gilly Hicks brand stores, which the company also plans to shutter this year. Abercrombie & Fitchs stock has struggled, posting one of the largest declines in the S&P 500 during 2013. To improve performance, the retailer is planning to shift marketing for its Abercrombie & Fitch to older shoppers while transforming its Hollister stores to a fast-fashion approach in line with H&M and Zara. A succession plan for CEO Mike Jeffries is also in the works. Last year, shareholders from Engaged Capital publicly campaigned for Jefferies dismissal, citing the retailers failure to adapt to fast-fashion, and Jeffries statements about excluding customers that he thought were too heavy for the brand. Read more at 24/7 Wall St.
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4. J.C. Penney
After J.C. Penneys sales began to steadily decline, the company tasked Ron Johnson, formerly retail head at Apple, with reinventing the retailers pricing strategy, only to see sales, earnings, and cash flow fall off a cliff. After years of avoiding closing stores, the company has recently said it would be shuttering several locations. At the start of 2014, J.C. Penney announced 33 store closings, to be completed by May, leading to the loss of about 2,000 jobs. Some investors and pundits believe the company has not been aggressive enough in cutting stores. As of November, the company had 1,095 department stores, down only slightly from past years. Not all news has been bad for the retailer, which reported surprisingly strong earnings in February. Additionally, Standard & Poors recently upgraded the retailers credit outlook, although it noted changes will still be necessary to improve its credit long-term. Read more at 24/7 Wall St.
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5. Office Depot
Office Depot merged with rival OfficeMax in November. Since the merger, the company has been cutting jobs at its combined headquarters. The next stage in integrating the two retailers, the company has stated, will be to cut store count. CEO Roland Smith admitted the companys merger was difficult for many workers, telling the Orlando Sun-Sentinel that it is difficult to focus on business when your personal future is uncertain. The company had 1,912 retail stores at the end of its latest fiscal year, including 823 OfficeMax stores. Since the merger, the company has closed 15 of its Office Depot stores and seven OfficeMax locations. Read more at 24/7 Wall St.
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7. Sears
Sears has been heading downhill since 2005, when Wall Street billionaire Edward Lampert merged Sears Roebuck & Co. with Kmart in a deal worth $11 billion. Since 2010, the company has closed roughly 300 stores. One of the few surges in the companys share price came at the end of January, after it announced the closing of its flagship store in Chicago in April. Shedding its assets has been a major part of the companys business for years. The company has not only dumped stores, but entire businesses, including Orchard Supplies Hardware Stores, Sears Hometown & Outlet Stores, Lands End, and a part of its stake in Sears Canada. Cowen analyst John Kernan recently noted that he expected Sears Holdings to close an additional 500 stores going-forward. Read more at 24/7 Wall St.
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9. Toys "R" Us
A Toys R Us was taken private by a consortium of companies in 2005. Nearly a decade later, disagreements among the companys ownership and a high debt burden have weighed down the retailer. In all, Toys R Us spent nearly three years trying to time an IPO, before backtracking last May. In early March of this year, industry sources told The Records NorthJersey.com that the company would soon close some 100 stores. Whether or not the company decides to close stores, major changes may be needed. Real estate giant Vornado, one of the three co-owners of Toys R Us, recently announced a more than $240 million writedown on its investment in the company. Among the reasons it gave were the companys 2013 holiday sales results, and our inability to forecast a recovery in the near term. Toys R Us has struggled to keep up with online competition as well. A December report from Bloomberg indicated it was easier to find the holidays hottest toys on Amazon.com than through Toys R Us website. Read more at 24/7 Wall St.
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