Arbitration or Lawsuit – Employment Disputes – Where Will Your Business Be?

Carol Keough June 20, 2013

The business owner can often make the choice between arbitration or lawsuit.  Where do you want to be if there is a dispute with one of your employees?  In litigating employment cases, I have stood before a jury of twelve people and watched their reaction to the story of an employee who was allegedly terminated in retaliation for requesting an accommodation for a disability.  In a very public forum the employee gagged and pretended to throw-up on cross examination. One of the jurors gasped and ran over to see if the employee was okay.

On the other hand, during arbitration, the parties were in a small conference room.  I saw very little reaction from the arbitrator to the repeated tears of the witness on cross examination.  The testimony just proceeded as if there were no interruption.  There are many advantages of arbitration.  Final and binding arbitration does not go before a jury of twelve people who may have many hidden experiences and bias when it comes to employers. And the arbitration is private.  The arbitrator appears more objective and usually weighs the testimony and not the emotions portrayed.  Arbitrations usually take place sooner than a trial.  The discovery battles in open court are resolved by the simple decision of the arbitrator, no mandamus or other appeals during discovery which can be cost effective. With an arbitrator the result may be more predictable since a neutral will have a strong background and training in the area of the law at issue.

If as an employer, you decide that you want all disputes with your employees to go to arbitration, then you should have the employees sign an arbitration agreement.  The agreement should provide that all claims including both wage and hour and discrimination are to be arbitrated.  However, an employer should be careful in establishing mandatory arbitration.  An arbitration clause must be carefully worded so that the employees cannot argue that the agreement is illusory and unenforceable.  An arbitration clause cannot be unilaterally changed by the employer without notice to the employees and assurance that disputes already in progress and in arbitration will not be affected by the changes made.  An employer should carefully consider arbitration and make a choice about how they want to handle employee disputes before a lawsuit arrives at the door.


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