It is becoming increasingly common for employers to adopt policies requiring that all employment-related disputes be submitted to mandatory binding arbitration. These policies are generally enforceable, even with respect to statutory claims of employment discrimination or wage and hour violations.1 While arbitration offers many advantages over litigation to employers, there are also disadvantages to arbitration that are not always fully considered by employers in adopting these policies. When counseling employer clients with respect to arbitration policies, it is incumbent upon attorneys to consider both the benefits and the detriments of these policies, and to properly tailor such policies to match the specific client’s needs, taking into account its work force and the client’s particular industry.
Advantages of Arbitration
Several of the generally cited advantages of arbitration are particularly relevant when it comes to employment disputes. For example, in arbitration the parties get to choose their “judge,” and their selected arbitrator or arbitrators will decide their case, not a jury. Employers tend to view juries as employee-friendly and unpredictable. The threat of a jury awarding excessive damages often drives employers to settle cases that they otherwise would not. Arbitrators are generally considered to be more predictable and restrained with respect to damages awards, and the fact that the parties select their arbitrator(s), usually from a long list of eligible candidates with varied backgrounds and expertise, may give employers comfort that they would not have with a jury as trier of fact.
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