Binding arbitration ruling

Dottie · April 2001

I would be interested in feedback from the attorneys regarding the Supreme Court ruling on March 21 regarding binding arbitration. From what I understand, any employer may require all employees to sign an agreement either prior or post job offer that would agree to arbitrate any and all workplace disputes. Should all of us begin drafting such a document for our workers to sign?

Theresa Gegen TX · April 2001

There are a lot of different issues your company needs to consider before implementing an arbitration program. The news media tends to report the issue like "arbitration is bad for employees and good for employers" -- but it is not that simple. Believe me, I have seen arbitrators give money damages to employees on claims a court would throw out. Also, arbitrators will rarely dismiss a claim without a evidentiary hearing (like a trial), even if it is clear that the employee does not have a claim. A couple of other issues with arbitration are that the award is final and almost completely unreviewable by a court of appeals (many of the large verdicts you hear about for employees get thrown out later by the court of appeals). Also, implementing a program can have a bad affect on employee morale (basically, they think -- here is the employer forcing me into something I don't want and giving me nothing in return).

Some of the upsides of arbitration are that it is generally less costly from an attorney's fees standpoint than a trial, it is quicker than traditional litigation (which in some cases can be a down side, because both the employee and the employer usually need a "cooling off" period), and if a full dispute resolution program is correctly designed for your company, it can be a benefit and resolve many disputes short of any type of litigation or arbitration.

I suggest that any company that is considering implementing such a program, work with experienced employment attorneys and develop a whole dispute resolution procedure (including things like an open door policy, mediation before arbitration or peer review committee type of things).

Good Luck!

System · April 2001

What a great response, Theresa! Thanks from all of us.

Julie Athey
Senior Attorney Editor
M. Lee Smith Publishers

pv25 · April 2001

Couldn't agree more with Theresa. Arbitration is not a panacea for employers. In light of the Supreme Court's decision, however, I'm sure that many employers will quickly move to adopt arbitration agreements without serious consideration of the issues involved.

Check out this link for some articles on setting up an ADR process:

[url]http://www.elinfonet.com/OLR_RZ.php[/url]

Click on Human Resources > Arbitration of Claims > General/HR Issues

ed · April 2001

Don't forget the expense of the Arbitrators - can be very expensive - they are attorneys who get paid a high hourly fee and if your arbitration is contentious with lots of pre-hearing conferences, the fee meter can really go - at least Judges are free.

Binding arbitration ruling

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