Why Do Employers Like Arbitration So Much?

In more and more employment agreements you are seeing what are known as arbitration clauses. These clauses are not unique to employment law; everything from injury cases to business lawsuits to consumer lawsuits often involves the use of arbitration. But what is it about arbitration that big companies, and particularly any kind of employer, big or small, like so much?

Why Arbitration is a Problem

Arbitration requires that your lawsuit be heard outside of a court. Rather, it will be heard by an arbitrator. An arbitrator is some kind of professional who may be quite experienced and knowledgeable, and may even be a retired judge, but the arbitrator is not a full time, sworn in judge, with an ethical obligation to uphold the judicial ethics.

More importantly, the arbitrator is not a jury, and that’s where the employee gets hurt the most; through arbitration, the employee loses the right to have his or her case heard before a jury of his or her peers.

No Emotion Necessary

Companies like this because as a general rule, it is more likely that there will be more people sympathetic to a worker, than who may be sympathetic to a business. Yes, juries are supposed to make rulings based on the evidence presented, and not on their feelings or emotions. But juries are human beings, and employers fear that more of them are employees themselves, than employers.

By taking the case out of the jury’s hands, and giving it to an arbitrator, the employer gives itself a better chance of avoiding a jury that just “feels bad” for the employee.

Limits on Discovery

But there are other reasons why employers like arbitration so much.

Arbitration limits how much information each side can get from each other—the number of documents, or the number of depositions that can be taken, may be limited compared to an actual lawsuit in court, where there is almost no limit to discovery, so long as it is necessary and relevant to the case. This limitation in arbitration usually works to the benefit of the employer, since it is the employee that has to prove his or her case.

Business Motives?

Arbitrators are also in business. Unlike a seated judge, the arbitrator or arbitration company needs to make money to stay in business. A company or larger employer may give that arbitration company a lot of business throughout the year. That tends to give an incentive to an arbitrator to rule in favor of an employer, as the employer is a “repeat customer,” whereas the employee often is not.

Arbitration agreements can be challenged, but they are enforceable—except in cases of sexual harassment, where the law recently changed, making forced arbitration fo these kinds of claims unenforceable.

Contact the San Jose employment law lawyers at the Costanzo Law Firm today for help if you think you may have a legal claim or lawsuit against your current or former employer.

Source:

epi.org/publication/the-arbitration-epidemic/