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Arbitration Is for Some But Not All
The defense of employment-related lawsuits is a significant expense for employers that, many times, cannot be avoided. At the same time, it is an expense that offers little return on investment for the employer. Despite the efforts of at least some courts to try to resolve these cases through early mediation or to move them faster through the system, claims of employment discrimination and other alleged wrongdoing in the workplace, often languish far too long.
The arbitration of employment-related claims has been advocated by some management-side employment counsel for years, as a means of reducing litigation expenses and limiting a company's exposure to large damage awards. There is little published empirical evidence, however, demonstrating whether the assumption that cost and exposure are actually limited proves to be true in a garden-variety, single employee dispute. One study of cases in the United States District Court for the Southern District of New York suggests that there is little cost benefit to employers in arbitration. Certainly, in those instances where an arbitration program is challenged, there can be a significant cost. The premise of this article, however, which is based on anecdotal evidence, is that an arbitration program, while not a solution for all employers, properly implemented and administered, can indeed achieve the twin objectives of cost containment and limiting exposure in many cases.
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