Arbitration Agreements and Employment Litigation

By Danielle Lovallo
Though mediation, negotiation, and collaborative law are all methods of alternative dispute resolution (ADR), arbitration has the most significant impact on employee rights. More and more businesses have begun to include arbitration clauses and binding mandatory arbitration agreements; contracts that once signed, force both parties to settle any future contentions privately, without a formal hearing.

These agreements have extraordinary ramifications on the wronged individual, especially in the context of employment law. Rather than a jury of peers, a verdict is rendered by a third party typically chosen by the employer.

Arguments in support of the process cite convenience, cost-effectiveness, and efficiency; yet, it still costs more money to try a matter before an arbitrator than a judge. Arbitrator fees are only "cost-effective" with respect to the financial loss they would encounter if the matter went to trial. If the employee recently finds him or herself out of work and without income, it doesn't make much of a difference if the employer splits the expense. If the employee cannot afford an arbitrator, their case simply does not get tried. If a case can't be pursued, an award cannot be granted, which is what makes the process so "cost-effective" for employers.

There are numerous disadvantages to the employee, forcing them to waive their rights to:

* Bring a claim to court- mandatory arbitration denies the employee the opportunity to present their case to a judge and a verdict by decision of their peers.
* Appeal - the decision of the arbitrator cannot be challenged unless the provisions for review have been made in the arbitration agreement. Otherwise, the ruling is final.
* Participate in class-action lawsuits - since matters cannot be pursued through formal litigation, the employee is barred from participating in class-action suits.
* Full discovery - Arbitrators may order or limit the time an individual is granted to collect evidence and prepare their case. Judges, on the other hand, will not impose such limits without a compelling reason.

Forced arbitration is a method of corporate damage control. Arbitrators very rarely award the types of verdicts rendered by juries. The victim is rarely compensated sufficiently by an arbitrator, and employers do not have to worry about deterring workplace discrimination, bullying, harassment, and whistle-blowing.