An Undeserved Bad Rap? Finding the Fairness in Mandatory Employment Arbitration

Authors

John G. Browning
Janey Whitney

Abstract

“As many frustrated empirical scholars have noted, it is [difficult] to obtain data regarding claims brought in either litigation or arbitration, and even when data is obtained, it is very [difficult to] compare the two sets of information.” Given the private nature of arbitration proceedings, not all data is readily available. Congress enacted the Federal Arbitration Act (“FAA”) in 1925, governing and providing for “judicial facilitation of private dispute resolution through arbitration.” Since 1925, the use of mandatory employment arbitration clauses has grown dramatically. With such exponential growth has come heightened attention to the practice, resulting in robust debate on whether mandatory employment arbitration is truly fair for the employee. While arbitration provides many benefits for the employee, such as faster resolution and lower costs, criticism of arbitration from the employee standpoint has nevertheless persisted. A number of studies of employee win rates in arbitration have taken place, with statistics varying from survey to survey. The most recent set of data from the American Arbitration Association (“AAA”), however, reveals that employees prevail at a higher rate in mandatory employment arbitration proceedings than have been credited by prior studies. This variance in statistics could be attributed to the low number of arbitration cases that are analyzed in each study, indicating larger studies are needed to put a definitive end to any debate. Although statistics tend to show a trend of higher success rates for employees through litigation, this can be attributed to other factors such as the low rate of lawyers willing to bring employment claims that do not have a high monetary amount attached and a high probability of prevailing on the claim. Generally speaking, attorneys are more likely to file lawsuits with a sufficiently high probability of winning, due to the time and expense associated with litigation. Litigation, however, presents heightened risks such as losing the case, negative publicity, and the investment of time needed for a court case to work its way through trial and potential appeal. In contrast, arbitration presents lower risk, with albeit often lower reward for the employee. In addition to the greater speed and lower costs associated with arbitration, the fairness of results are an oft-overlooked positive to arbitration of employment disputes.

First Page

174

Recommended Citation

John G. Browning & Janey Whitney, An Undeserved Bad Rap? Finding the Fairness in Mandatory Employment Arbitration, 7 Bus. Entrepreneurship & Tax L. Rev. 174 (2024).
Available at: https://scholarship.law.missouri.edu/betr/vol7/iss2/4