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Why Arbitration Is Bad For Employees

Arbitration is a private trial, generally before one or three arbitrators (usually attorneys or retired judges).  The results are binding and usually not appealable.   The rules of evidence do not apply.  The arbitrators are not required to follow the law or state a reason for their decision.  Here are four reasons arbitration is usually bad for the employee:

1.     The Arbitrator.  My experience with arbitrators has been that they are usually conscientious people trying to do what is just, but here is the problem if you are the employee:  arbitrators are human.  The arbitrator lists from which you will likely have to choose an arbitrator are weighted with arbitrators who are or where formerly attorneys who primarily represented companies.  They have been trained for years to see a dispute from the company's side.  Also, if you are an employee you may go to arbitration once in a lifetime.  Companies are repeat players, and once an arbitrator rules against them they will usually not choose that arbitrator again.  Arbitrators know this. 

2.   The Cost.  Arbitration is expensive because the arbitrator has to be paid by the parties for his/her time (unlike a real judge).  Employees generally cannot afford the thousands of dollars it costs to pay an arbitrator, which makes it harder to find an attorney to take employee's case in arbitration.  It's not much better for the employee if the company pay the arbitration fees, because, if you are the employee, you then have a situation where the party you are suing is paying the judge.  This would be unethical in a court of law.  In arbitration it's accepted as common practice.

3.  Limited Discovery.  Discovery is the process by which you find out information in the other party's possession.  In employment discrimination cases, the employer has possession of personal files, performance reviews and other information necessary to prove discrimination.  They also usually have control over the key witnesses (usually their employees).   In real litigation, we take depositions, send interrogatories and requests for documents to find out information necessary to prove our cases.  However, in arbitration discovery can be severely limited.  This almost always hurts the employee and helps the employer.

4.  No Jury.  There are no juries in arbitration.  I will almost always trust the collective intelligence of twelve people over any one (or three).  I'm always amazed at the details and nuances juries absorb.  Also, as humans we are all biased to a certain degree depending on the issue.   Twelve people balance out and temper each other's biases better than any one person can.  Lastly, juries are usually made up of employees, not employers.

The arbitrators I've tried cases to have been good, honest people, who were fair and just and did a great job.  If you end up in arbitration, I hope you will have the same experience.  But practically everything in the arbitration system cuts against the employee and in favor of the employer.  And, if there is any doubt that arbitration favors employers, just ask yourself why it is that employers are the ones insisting employees sign arbitration agreements.  GSF

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