Revisiting The Arbitration of Employment Disputes

In the years since the U.S. Supreme Court’s landmark decision in Gilmer v. Interstate/Johnson Lane Corp., 500 U.S. 20 (1991), employers have continued to weigh the pros and cons of utilizing predispute agreements to arbitrate employment-related disputes. More recently, employers considering the competing arguments for and against utilizing agreements to arbitrate employment disputes are able to study emerging empirical research bearing on these considerations. See, e.g., A. Colvin, “Empirical Research on Employment Arbitration: Clarity Amidst the Sound and Fury?” 11 Empl. Rts. & Empl. Pol’y J ., 405 (2007); D. Lewin, “Workplace ADR: What’s New and What Matters?” Arbitration 2007: Workplace Justice for a Changing Environment, Proceedings of the 60th Annual Meeting of the National Academy of Arbitrators (“NAA”), 23-39 (BNA, 2008). The most recent of this empirical research suggests that roughly 15 to 25 percent of employers have now adopted arbitration of employment disputes, covering nearly 25 percent of nonunionized employees. This trend, coupled with the declines in both the unionization rate and the use of labor arbitrations under collective bargaining agreements, suggests that employment arbitration is now a more-utilized system for resolving workplace disputes than labor arbitrations in the collective-bargaining context.

Considerations Involved

The first and foremost consideration of employers opting to enter into agreements to arbitrate employment-related disputes is an alternative to the costs and delays of litigation through the courts. This is particularly so with employers operating in jurisdictions with relatively higher levels of employment litigation, such as California (and New Jersey). During the past 15 years, there has been a tremendous increase in the filings of employment-related suits in state and federal courts.