Question

What are the pros and cons of force arbitration provisions? Do you agree with the Al Franken amendment? If you were starting a business, would you have your employees sign an arbitration agreement prior to starting working for you?

Answer 1

Also called as Mandatory Arbitration, Forced Arbitration prohibits the workers from suing the employer when they enter into a dispute or face other conflicts and issues while on the job. Therefore, when there is an issue and the employee wishes to bring a lawsuit, he/she is denied a public hearing, and instead, a private arbitrator is hired for resolving the dispute.

Pros/Advantages of Forced Arbitration

Advantages for employers: Arbitration clause may allow the companies/employers to require that an employee brings his/her claims individually. This would avoid the trouble that is caused by the collective actions.

Arbitration, a private preceding, also offers another advantage to the employers in that they can easily avoid public embarrassment and settle an issue before it gathers public attention.

Also, in most cases, it has been found that the jury and judges award a greater compensation for damages when compared to arbitration. Arbitration has also been found to be fast when compared to traditional litigation and requires a lower cost as well. Therefore, employers can use forced arbitration to ensure that their productivity does not suffer.

Advantages for Employees/Consumers: The legal and court system of justice is often seen as excessively technical, slow, and even intimidating for some people. Therefore, at first sight, many people will find forced arbitration to be a good measure to overcome future woes and troubles. Further, suing and fighting a case in court may also require expenses and there will be a fee to be paid to the lawyer as well. All these expenses can be avoided just by signing the forced arbitration clause.

The arbitration may also provide for greater informality and flexibility and issues of minor importance may be resolved quickly when compared to court proceedings and judgments.

Cons/Disadvantages of Arbitration

Disadvantages for Employers: In real practice, organizations find that the arbitrators provide a split decision and do not rule out completely in favor of the employer. Also, the cost and length of arbitration proceedings are nearing the court proceedings, and sometimes the employers also have to pay the legal fee of the other party or the plaintiff.

While the forced arbitration clauses may appear to be beneficial at the start to the employees or the consumers, they make the sufferers/parties go to inferior forums where they may not get the right resolution. Because there is no further right to appeal once the issue and dispute have been decided by an arbitrator, the sufferer may not do anything when he or she is not satisfied with the outcome.

Disadvantages for Employees/Consumers: Courts have always provided a greater extent of discovery when compared to the private, invisible, and hidden parties that mediate and act as an arbitrator for corporate disputes.

The arbitration agreements have also been found to alter and change the “burden of proof”, reduce and shorten the statute of limitations, and also reduce the time a party gets for presenting his/her case. When the constrictive procedural rules are imposed, justice will take a back seat.

The awards of forced arbitration are not generous and they are not appealable as well. Therefore, with a forced-arbitration clause in place, the probability of consumers and employees winning a case has reduced and so has the amount compensated. Some agreements also notify that the losing party will have to pay all the fees, including the attorney fee of the other side for an arbitration case, which acts as a detriment for consumers and workers that may have fewer resources when compared to the large corporations and employers.

The Al Franken Amendment

The Al Franken amendment prohibited the award of funds and contracts to parties/contractors/companies (in defense sector), which limited the abilities of their employees to go to courts, making it mandatory for the employees to solve all disputes through arbitration. In the background of the amendment was the case of ms. Jamie Leigh Jones. The employee of KBR was drugged and raped by 7 other KBR employees in the year 2005, in Baghdad, Iraq. When Ms. Jones filed the lawsuit in the year 2007, against the company and the culprit employees, the company sought to compel her for arbitration. The court found that many of the claims and allegations made by Jones were outside the scope of the arbitration including mandatory arbitration.

The Al Franken amendment identifies that claims including sexual harassment claims, and racial and sexual discrimination claims (in areas including termination and promotions) should not be subject to arbitration. I fully agree with the amendment, as certain issues are beyond the scope of arbitration and no compromise should be made in providing compensation for these issues. Certain claims including sexual harassment and rape, discrimination, and battery claims have intense severity and an improper or subdued approach towards their handling will lead to severe backlash. The punishment for these kinds of offenses should be severe and arbitration may not provide that. These are criminal cases that can only be handled by courts. Any such approach for forcing arbitration for these claims is unethical and goes against the ethos of society and business as well. The amendment was passed in either Houses of Congress in the year 2010 and is a law now. For certain issues and allegations, employers cannot hinder the right of an employee to go to court.

My Approach To Arbitration For My Firm And Employees

While arbitration may have its own benefits, forced arbitration does not produce the desired results or benefits that an employer may expect. As can be inferred, the time and cost involved are high in the practical scenarios and situations. With new laws and amendments in place, it is also not possible to pursue arbitration for all kinds of issues and matters. In today's world, where communication is quick and easy (through numerous social media networking websites and digital channels), forcing employees to arbitrate will be harmful for the reputation of the company in the market and the world. The company may not be able to attract the right talent and consumers and stakeholders will also shy away from associating with a company that does not have an ethical approach towards handling employee grievances and issues. Discovery is also limited with arbitration and I would definitely want that any issue is resolved adequately and sets the right precedence. Ethics are crucial to a firm’s sustainability and hence arbitration clauses should include the interests of all parties.

Therefore even if I wish to have use arbitration in the employment relationship, I will stress on full employee agreement (with no pre-conditions attached) and cooperation, will only include the right issues, and the final draft will include the views and interests of all parties. Caring for the employees will be my foremost motive and I will see to it that the employees have all the rights and opportunities even when they agree to be a party to the arbitration.