This paper examines how the Global Financial Crisis (GFC) 2008-09 influenced the usage and outcomes of discrimination arbitration cases for employee plaintiffs in the securities industry. It casts light on whether arbitration is able to serve as an appropriate and preferable workplace dispute resolution system during a macroeconomic crisis when aggrieved employees are most vulnerable and financially powerless. Macroeconomic recessionary periods are characterized with an increase in employment discrimination claims. As the labor market becomes slack during an economic recession, it becomes easier for firms to indulge in discriminatory behavior. In such a scenario, employee-plaintiffs desire an inexpensive, faster, and efficient dispute resolution process. As arbitration is characterized to have all these features, it can be expected that if given the option to choose between arbitration and litigation, employee-claimants would lean towards arbitration. Using the securities industry data from the Financial Industry Regulatory Authority (FINRA), this paper examines whether this is what happens in practicality. The financial industry serves as an ideal means of conducting this analysis because disputants have the option to mutually choose between arbitration and litigation to resolve their discrimination cases. The paper also examines how the outcomes of discrimination arbitration cases varied during the recession. Results are interpreted to answer questions regarding whether arbitration cases rise during a recession; what happens to arbitrations’ employee win rate during a recession; does arbitration provide higher or lower compensatory award amounts during a recessionary period? All these questions are important and valuable in terms of assessing whether arbitration is a viable and preferable option for employee-plaintiffs during an economic crisis, a time when claimants need justice the most. Undesirable findings related to arbitration may just serve as another ammunition for opponents of arbitration. Adverse results would be consequential for those who want to continue expanding arbitration access at the expense of the court system.
The Effects of the Global Financial Crisis on Employment Arbitration: Evidence From the Securities Industry Discrimination Complaints,
2022 J. Disp. Resol.
Available at: https://scholarship.law.missouri.edu/jdr/vol2022/iss1/6