puget sound business journal december 14-20, 2012
Law &
December 14-20, 2012
Mandatory
arbitration
can workcan
for employers
employees and
Mandatory
arbitration
work forand
employers
Y
“Y
ment issues.
There arbitration.
torney feesThis
andreduces
costs, the
anduncertainty
fewer disour
jury trial
ouremployment
employment
juryschedtrial
arbitrate
statutory
EMPLOYMENT
is
no
jury
in
arbitraputes.
Bringing
a
claim
in
arbitration
uled
next
week
has
been
bumped
scheduled next week has been
employment claims. of jury trials because juries can be unprelaW
tion.
reduces dictable
costs about
30 percent
percent
because
of an
criminal
bumped
because
of ongoing
an ongoing
crimiFor This
a successful
and bring
biases totothe50decisionthe uncertainty of less than what a jury trial would cost.
trial,” the attorney told his client,
nalemployee
trial,” thesuing
attorney
told his client, an
arbitration
process.
These
risks existjury
to
jury trialsprogram,
because making
The average
cost
of ansame
employment
an
his employer.
employee
suing
his
employer.
the
process
should
a
lesser
degree
when
using
a
private
arbijuries can be unpre- trial may exceed $200,000, while emWaiting 14 months was not enough.
14 months
not ready
enough.
be
fair because
it’s trator,
but can
be mitigated
by cost
a thorough
dictable
and bring
ployment
arbitration
may
in the
AllWaiting
that money
and timewas
getting
biases
the todecirange of $40,000
to $60,000
for
wasted.and time getting ready for
Alltrial:
that money
the
righttothing
do, pre-selection
investigation
of the because
arbitrathere
is a more informal process, and no
sion-making
pro - tion
What
if the employee’s claim had
trial:
wasted.
and
because courts
panel.
d.
michael
appeal.
Data alsoresults
confirm
that compacess.
These
same
been
arbitrated?
Studies
confirm
that
What if the employee’s claim had been
will invalidate unfair
— Arbitration
in lower
attornies
rolling
out
arbitration
programs
do
r
isks
ex
ist
t
o
a
arbitration
would
have:
(1)
resolved
this
reilly
arbitrated? Studies confirm that arbitraprovisions regard- ney fees and costs, and fewer disputes.
lesser degree when not experience an increase in arbitrated
claim cheaper and faster for the employtion
would
have: (2)
(1) decided
resolvedliability
this claim
less.
first step
claim
in company
arbitrationincludes
costs
usingThe
a private
ar- Bringing
claims, asalong
as the
ee
and
employer,
cheaper
and
faster
for
the
employee
and
about
30
percent
to
50
percent
less
than
should
contemplate
an
“independent
inand damages like a courtroom decision, bitrator, but can be mitigated by a thor- the two-step dispute resolution process
employer,
(2) decided
liability
and dam- ternal
a jury here.
trial would
The aver-of
review” process.
Clients instituting
ough pre-selection
investigation
of the what
advocated
In fact,cost.
85 percent
and
(3) helped
to preserve
a positive
arbitration
panel.
employment
disputes arejury
resolved
beworking
between
employee
ages likerelationship
a courtroom
decision,
and this
cost of an employment
trial may
found that
employees resolved many age
— Arbitration
results in
at- exceed
fore arbitration,
lawyers. arbiand
(3) employer.
helped to preserve a positive work- workplace
$200,000, without
while employment
issues informally
andlower
quickly,
a binding
decision
ingA rbitration
relationship—between
employee
and improving morale. This has the effect of tration may cost in the range of $40,000
by an expert neutral decision-maker
employer.
to $60,000 because there is a more
reducing the number of lawsuits.
through a more informal process in an
Arbitration
—
a
binding
decision
by
an
informal process, and no appeal. Data
If
this
first
step
does
not
work,
however,
office setting — has become an increasexpert
neutral
decision-maker
through
a
also confirms that companies rolling out
then
the
employee
can
request
arbitration
ingly popular forum to resolve employmore disputes.
informal process in an office setting by an independent expert with a process arbitration programs do not experience an
ment
University
Journal
of that assures that all remedies available increase in arbitrated claims, as long as
—Ahas
become of
an Michigan
increasingly
popular
Law
Reform
study
of 21 major
corpora- in court are in arbitration, allows each the company includes the two-step disforum
to resolve
employment
disputes.
tions
found arbitration
clausesJournal
in 93 perA University
of Michigan
of side to participate in the selection of the pute resolution process advocated here.
cent of the employment contracts.
Law Reform study of 21 major corpora- arbitrator and to engage in discovery In fact, 85 percent of employment disIf rolled out correctly, with fair and
tions found
arbitrationarbitration
clauses in 93
balanced
procedures,
canperbe and present witnesses, and makes sure putes are resolved before arbitration,
centexcellent
of the employment
contracts.
an
way to resolve
workplace that costs incurred by the employee without lawyers.
If rolledArbitration
out correctly,
withsome
fair new
and are not higher than costs a court would
— Arbitration is usually private. In
disputes.
is not
concept.
years, the
vast majority
of impose.
balanced For
procedures,
arbitration
can be
arbitration, there are no public records
collective
bargaining
agreements
have
an excellent
way to resolve
workplace
Studies confirm that a fair arbitration or hearings, and the media generally do
used
arbitration
to
resolve
disputes.
disputes. Arbitration is not some new process reaps many advantages for both not have access to the details. Employees
The number of companies offering
can avoid public disclosure of medical
concept. For years, the vast majority of employee and employer, including:
arbitration of employment disputes is
and employment records. Employers can
collective
bargaining
agreements
have
—
Arbitration
is
faster.
Nearly
every
growing in part because the U.S. Suused arbitration
to resolvethe
disputes.
preme
Court recognizes
benefits of study reviewing the issue has concluded avoid public disclosure of past disputes or
The number
offer- that arbitration is faster than litigation, issues.
arbitration.
Since of
the companies
1980s, the court
has
rulings
encouraging disputes
arbitra- resolving cases sometimes in half the
Studies confirm that arbitration proing issued
arbitration
of employment
tion
of nonunion
employment
to time. Oftentimes arbitrations can be held grams designed to resolve employment
is growing
in part
because claims
the U.S.
reduce
court
backlogs.
Supreme
Court
recognizes the benefits of within 90 days — much less than the typ- disputes with fair procedures should proMore recently, the Supreme Court
Washington State
Safecotrial
Field process.
CenturyLink Field Uwajimaya videExperience
Marriott
benefits to employee
and employer
arbitration. Since the 1980s, the court has ical 20-month
Convention &
Music Project
concluded that unions and employers
& Event Center
Waterfront
alike.
issued
rulings
encouraging
arbitration
of
—
Median
awards
in
arbitraTrade Center
Hotel
also can require unionized employees to
nonunionstatutory
employment
claims to
reduce tion and in trial are quite similar. In
arbitrate
employment
claims.
court
For backlogs.
a successful arbitration program, arbitration, the decision is delegat- D. MICHAEL REILLY is director of the
theMore
process
should
fair because
recently,
the beSupreme
Court ed to a neutral party, selected by the Labor and Employment Practice Group
it’s
the right
thing
to do,and
andemployers
because employee and employer, with expertise in at Lane Powell PC, and can be reached at
concluded
that
unions
courts
invalidate
unfair
provisions
also canwill
require
unionized
employees
to employment issues. There is no jury in reillym@lanepowell.com.
regardless. The first step should contemplate an “independent internal reReprinted for web use with permission from the Puget Sound Business Journal. ©2012, all rights reserved. Reprinted by Scoop ReprintSource 1-800-767-3263.
view” process. Clients instituting this
found that employees resolved many
workplace issues informally and quick-
—
In ar
cords
ally
Emp
of m
Emp
of pa
Stu
gram
dispu
prov
ploye
D. M
and E
and ca
Brig
S
Treat