Weigh the Pros Against the Cons

An overview of the benefits and potential pitfalls of mandatory employment arbitration.

PROS

Supporters of mandatory employment arbitration cite the following advantages:

1. It provides for prompt resolution of the employment dispute without the onerous personal, professional and financial costs associated with litigation.
2. It reduces legal expenses for both parties, including possibly reducing the employer’s advantage in outspending, “outlawyering” and outlasting an employee in court litigation.
3. It provides for more expert and experienced decision makers (arbitrators) to decide the dispute, and arbitrators can be expected to provide more predictable and consistent results than juries.
4. It reduces exposure to unpredictable and capricious jury awards for emotional distress and punitive damages.
5. It permits disputes, and their resolutions, to remain private.

CONS

Critics of mandatory arbitration plans cite the following disadvantages:

1. By making predispute arbitration agreements a condition of employment, employees must relinquish their statutory rights to a trial in a judicial forum.
2. Mandatory arbitration doesn’t guarantee either the competence or the impartiality of the arbitrators.
3. Arbitration may reduce the generosity and effectiveness of the remedy for cases in which there has been a wrong, and there’s no deterrent effect when the proceeding is kept confidential.
4. These plans may have the intended or unintended effect of discouraging employees from joining unions.
5. The courts are better able to quickly and clearly develop consistent interpretation of law, providing better guidance for both employers and employees.
6. More user-friendly arbitration may open the floodgates to claims that might not otherwise be taken to court.

Source:“Developments in Employment Arbitration” by Mei L. Bickner, Christine Ver Ploeg and Charles Feigenbaum. This article was published in the January 1997 issue of Dispute Resolution Journal.