Arbitration of Employment
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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, considered to be unenforceable five years ago, have recently 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:
In addition, an ADR program can be a very effective tool in a company's attempt to remain union-free, as one of the biggest selling points by a union is binding arbitration. Benefits 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. 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 if the arbitrator's decision will be binding on both the employer and employee. Next, who will administer the arbitration? The American Arbitration Association and the Federal Mediation and Conciliation Service are two 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. Employees may feel it is unfair to have to pay these fees. Employers that currently have an ADR program in place report that there is a reduction in the number of claims filed by employees and a reduction in the cost expended per claim. Obviously, the chance of a "runaway" jury is eliminated as well. If you want more information with regard to an arbitration agreement with your employees, give us a call. Fortney & Klingshirn |
