Prevalence of Employment Arbitration is Measured

Business Conflict Blog by Peter Phillips

Two recently released survey reports measure the pervasive use of arbitration to resolve workplace disputes.

Alexander J.S. Colvin of the Economic Policy Institute in Washington, D.C., has concluded that, “since the early 2000, the share of workers subject to mandatory arbitration has more than doubled and now exceeds 55 percent.”  Key findings of Colvin’s study include:

• 53.9% of nonunion private-sector employers have mandatory arbitration procedures, and 65.1% of employers with 1,000 or more employees have them.
• 56.2% of nonunion private-sector employees are subject to mandatory employment arbitration procedures.
• 30.1% of employers who require arbitration also include class action waivers in their procedures
• Large employers are more likely than small employers to include class action waivers.

A second study was released by Prof. Imre S. Szalai of Loyola University New Orleans School of Law and published by the Employee Rights Advocacy Institute for Law & Policy.  Prof. Szalai examines the use of arbitration agreements in the workplace by the top 100 largest domestic United States companies.  Key findings include:

• 80% of the companies in the Fortune 100 have used arbitration agreements in connection with workplace disputes since 2010, and
• Of the 80 companies with arbitration agreements in the workplace, 39 have used arbitration clauses with class action waivers.

Both studies conclude that these trends are adverse to employees.  The Colvin study states that “mandatory arbitration is a growing threat to workers’ rights,” and the Szalai report states, among other things, that “[t]he widespread use of forced arbitration threatens to undermine public confidence and trust in the American justice system.”

These studies’ empirical data are compelling and a necessary and valuable contribution to any fact-based policy discussion.  Their conclusions seem less reliable.  Both researchers seem to assume that arbitration lacks due-process guarantees of procedural fairness; that arbitration is not as accessible as public courts; and that our institutions of public justice are capable of absorbing all off the employment claims now being handled in arbitration.  They also assume without support that employees’ interests are better served in court than in confidential arbitration (assuming that procedural fairness is observed and that employment arbitration is faster and less expensive than employment litigation).  These issues are among those that need to be empirically studied before policy conclusions can be reached with the confidence and clarity that these reports reflect. 

                       

F. Peter Phillips

F. Peter Phillips is a commercial arbitrator and mediator with substantial experience providing consultation on the management of business disputes to companies around the globe. A cum laude graduate of Dartmouth College and a magna cum laude graduate of New York Law School, Mr. Phillips served for nearly ten years… MORE >