(Bloomberg) -- Bank of America Corp. will require its US employees to take nearly all their legal disputes to private arbitration, joining its Wall Street peers that have sought to resolve workplace conflicts outside the public eye.
The second-largest US bank started informing workers of the change on Friday, according to a person familiar with the matter. The new policy goes into full effect within a month, the person said, asking not to be identified discussing a private matter.
“This policy aligns us with our peers in the financial services industry,” a representative for the bank said in an emailed statement, noting that the company’s Finra-registered employees are already required to arbitrate certain disputes. The Financial Industry Regulatory Authority requires all its members with a broker-dealer license to handle disputes through arbitration.
Bank of America, based in Charlotte, North Carolina, employs more than 200,000 people around the world.
Arbitration is a more secretive system that Wall Street helped popularize over the years. Corporations in the finance industry and beyond have long tried to resolve cases as quietly and cheaply as possible by using private settlements, non-disclosure agreements and contracts that force workers into arbitration rather than the court system. Critics say the tactic has helped nurture a noxious culture at some companies, and that it results in lower payouts.
The new BofA rule doesn’t apply to sexual harassment and assault claims, which employees can still bring to court. The US has banned mandatory arbitration for those types of claims, as well as retaliation claims from whistleblowers. The procedure involves a panel of arbitrators and a discovery process with hearings and testimony.
Forced arbitration came under scrutiny when a global reckoning about sexual harassment was unleashed in the #MeToo era, fueling concern that companies used the system to keep complaints from coming to light and to cover up for repeat offenders. Arbitration decisions typically aren’t publicly disclosed.
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