Employers are increasingly including mandatory-arbitration clauses in the agreements employees sign after being hired. The clauses are designed to prevent employees from filing lawsuits against their employers for just about any kind of employment-related issue, from unpaid overtime to unlawful discrimination and wrongful termination. Instead of going to court, employees are required to submit disputes to a private arbitrator. Because our legal system favors freedom of contract, an employee who is subject to a mandatory-arbitration clause may have no option but to comply. For employees the arbitration process can offer some benefits when compared to litigation, but it has a range of potential problems that make it a mixed blessing.
Arbitration has some advantages over ordinary litigation . . .
Arbitration can be thought of as a “light” form of litigation. Like litigation, lawyers usually represent both sides in the dispute, there are rules governing what can be used as evidence, and there are rules of procedure that in theory ensure that both sides receive a fair hearing. For employees, arbitration has two main benefits over litigation: it tends to be faster and cheaper. The backlog in our court system means a new case can take years to resolve, while an arbitration firm tends to not have the same bandwidth problem. And because the rules are simpler and the process less formal, attorneys’ fees and other costs tend to be lower.
. . . but many disadvantages.
For an employee the downsides of arbitration can be significant. Here are just a few of the issues:
- No option to appeal. A typical arbitration clause will provide that the results of the arbitration are binding and can’t be appealed to the courts. An employee who isn’t satisfied with the outcome of binding arbitration may have no right to appeal the decision.
- One reason employers favor private arbitration is the secrecy of the process. The results of private arbitration typically are confidential, and quite often the employee is bound by an obligation to keep the results secret as well. In cases involving unlawful discrimination or sexual harassment, one can see how a confidential process benefits the employer at the expense not only of the individual employee bringing the complaint, but potentially many other employees as well.
- Unequal power. Litigation tends to balance the inherently unequal employer-employee relationship, by giving both sides equal rights before the law. Private arbitration doesn’t always meet the same standard. Some arbitrators may have an incentive to favor employers, because an employer will continue to use an arbitrator that it thinks will take a more favorable view of the employer’s side. This problem has been well documented.
Together these problems can frustrate an employee’s efforts to enforce important legal rights. Because arbitration can be binding and unappealable, it is especially important for employees to seek good legal advice.
GGRM is a Las Vegas law firm
The attorneys at the law firm of Greenman Goldberg Raby Martinez are proud to serve working people in the Las Vegas area. If you are in a dispute with your employer and have questions about how a mandatory-arbitration clause affects your rights, we would be happy to talk to you about your options. For a free attorney consultation call us today at 702-388-4476 or ask us to reach out to you through our contact page.