Employment Arbitration Support on the Rise

by Amy Chen

Arbitration has often received controversial and mixed responses from companies, trial lawyers, labor leaders, and civil rights advocates. Employers highly value and frequently use this tool to resolve workplace disputes with their employees. Very often, as a condition of their employment, employees must waive their right to litigate and instead use arbitration proceedings.

Arbitration advocates argue that statistically, arbitration is an efficient tool that can produce similar outcomes as litigation would. Furthermore, they comment that one of the advantages for employees is that they can afford to use the arbitration system, whereas corporations are usually the only parties that can afford to pursue litigation. Critics, on the other hand, argue that the current law does not require arbitration to be a fair process, and that this allows companies to take advantage of its limitations.

A United States Department of Labor Study revealed that a notable portion of employer arbitration plans do not fulfill minimum due process requirements. For instance, some arbitration provisions deny employees the right to submit evidence, and they also prohibit awarding punitive damages to employees who win their cases. According to critics, in arbitration proceedings, employers usually choose the arbitrator, which does not give the other side the opportunity to choose a judge. These factors, they argue, undercut the fairness of the arbitration proceedings. More information can be found here.

Many dispute proceedings are overseen by well-established arbitrators affiliated with nationally recognized organizations such as the American Arbitration Association and the American Academy of Arbitrators. However, critics point out that numerous arbitration cases have gone to less reliable arbitrators who fail to facilitate fair and quality arbitration proceedings for employees. Additionally, many employees are in a less advantaged position when they sign their employment contracts in the first place, and often overlook arbitration conditional agreements. More information about the arbitration debate can be found here.

Nevertheless, the Supreme Court has upheld arbitration agreements cases such as Circuit City Stores, Inc. v. Adams in 2001, in which a 5-4 majority ruled that employers can enforce arbitration agreements in employment contracts. On April 7, 2014, in BG Group PLC v. Republic of Argentina, which concerns a treaty dispute between a corporation and a sovereign nation, the Court further upheld an arbitrator’s authority in determining issues in arbitration proceedings, broadened the significance of arbitration, and affirmed the favoring of arbitration over restricted judicial intervention.

Through these arbitration cases, the Supreme Court seems to affirm its favor of arbitrators’ authority and broadened power of arbitration proceedings over litigation and judicial involvement. However, it is important to note also the shortcomings of arbitration for employees. While the system is highly favored and supported by the Court and employers, it is by no means perfect and its flaws must be addressed to ensure fairness and quality proceedings for those often in disadvantaged positions.