Arbitration of Employment Disputes
Introduction
The litigation process can
be costly, time consuming, and frustrating for both employers
and employees. Some employers have responded by agreeing to
arbitrate employment disputes. Such arbitration clauses gained
acceptance by state and federal courts.
Arbitration is a voluntary
process, requiring an agreement between the parties to the
dispute. The agreement to arbitrate may be entered into at
the time of the dispute, or before the dispute arises. Arbitration
involves the presentation of a dispute to an arbitrator, or
a panel of arbitrators, instead of a court. The arbitrators
are usually experts in the field of employment claims. The
arbitrator makes factual and legal determinations, without
the use of a jury. An arbitrator's decision is usually binding
on all parties, and is usually very difficult to modify or
vacate.
Arbitration is usually the
last step in an alternate dispute resolution (ADR) process.
ADR usually starts with an informal process, building up to
arbitration. The informal steps can include an "open
door" policy, peer review, and mediation. Arbitration
is typically used only after the informal procedures are exhausted
Benefits of ADR for employers
An ADR program can benefit
employers through:
- early detection and correction
of meritorious complaints;
- a streamlined process
for litigating disputes;
- reduced costs and attorneys
fees. Whether arbitration actually reduces litigation costs
is currently an open question; and
- elimination of juries,
reducing the possibility of irrational verdicts.
Costs of ADR for Employers
Many courts and some arbitration
services require the employer to pay for the costs of the
arbitration. Arbitrator fees and costs for the arbitration
services can range from $15,000 to $50,000 and more.
Arbitration decisions are
final. Nothing guarantees an employer that the arbitration
decision will be rational and well supported. If it is not,
then the employer generally cannot appeal the decision.
Benefits and Costs of ADR for employees
An ADR program can benefit
employees by providing an effective method to voice disputes,
timely administration of claims, and reduced costs and attorneys
fees. An employee will not be able to take a case to court
and present his or her case to a jury. Further, if the employer
believes that mandatory arbitration will result in lower recovery
for the employee, the employer will have less of an incentive
to settle.
Considerations for implementing ADR policy
In implementing an ADR policy,
companies should consider whether to make the ADR policy voluntary
(on a case by case basis) or mandatory. Companies also need
to determine what type of dispute should be covered by the
policy. For example, should an employee only be allowed to
complain of conduct prohibited by law, or should any complaint
be heard?
Companies should also decide
what steps to require before going to arbitration. Many policies
required the filing of a grievance before arbitration. Policies
also may require mediation before arbitration.
Companies must also decide
who will administer the arbitration. The American Arbitration
Association, the Federal Mediation and Conciliation Service
and Judicial Arbitration and Mediation Services are three
possibilities. Also, the cost of the arbitration is an issue.
An employee can file a lawsuit for a small filing fee. Arbitration,
on the other hand, can have a significant filing fee, administrative
fees, and fees for the arbitrator.
If you want more information
with regard to an arbitration agreement with your employees,
give us a call.
Fortney
& Klingshirn
4040 Embassy Parkway, Suite
280
Akron, Ohio 44333
telephone 330-665-5445 - fax 665-5446
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