For many years I have been extolling the advantages of employment arbitration programs for dealing with employee disputes. Arbitration, which is a form of alternative dispute resolution, places a dispute before a private arbitrator rather than a judge in court. By avoiding the courts, the dispute proceeds to resolution quicker in front of an experienced arbitrator; employers avoid the high attorneys’ fees and unpredictable verdicts associated with jury trials; and privacy can be maintained throughout the arbitration. At the same time, employees are provided a forum in which they receive a fair and impartial hearing on their claims and are entitled to all rights they have under the laws, with the exception of a jury trial.
On May 21, 2018 the U.S. Supreme Court issued a long-anticipated ruling that provides yet another reason for businesses to seriously consider implementing the use of arbitration agreements. In Epic Systems Corp. v. Lewis, the Supreme Court ruled that arbitration agreements requiring only individualized proceedings are enforceable under the Federal Arbitration Act. The cases at issue arose from a 2012 decision by the National Labor Relations Board (NLRB) that held requiring employees to waive their right to bring and/or join in class or collective actions violated the National Labor Relations Act.
Obtaining protection from the extremely costly class and/or collective action employment litigation through an employment arbitration program should be seriously considered by every business. In considering whether or not to adopt or retain such a program, an employer must make a particularized decision based on its own corporate culture, its unique circumstances and balance the advantages and disadvantages involved in arbitrations. Included among the disadvantages are the recently escalating arbitrators’ fees and expenses which can, in some instances, exceed the cost of a single court action.
If an employer decides that an employment arbitration fits within its best interests, it must now ensure that its current arbitration agreements address class and collective proceedings and require that any such dispute will be resolved through only one-on-one arbitration rather than class or collective arbitration. If an employer does not have a current arbitration program, care must be taken in preparing and properly implementing the program. The waiver of the right to bring class or collective actions must be explicitly stated and perhaps highlighted in the agreement. The agreement must not contain unreasonably short time limits or unreasonable limitations on remedies that could be argued as unconscionable. Reasonable discovery limitations and a reasonable forum location should also be included. Finally, to ensure that an arbitration agreement will be upheld, employers should consider paying for the full costs of the arbitration and providing for damages and attorneys’ fees consistent with the underlying statute.
In the event an employer opts against adopting an employment arbitration program, it should nevertheless consider other alternatives to minimize the costs and uncertainties related to a jury trial. One of the best methods of accomplishing this is to adopt a jury waiver agreement to avoid the costs of private arbitration while, at the same time, minimizing the uncertainties created by a jury trial.
Ross, Brittain & Schonberg can assist you in weighing and balancing the costs and benefits involved in employer arbitration programs. Please contact either Lynn Schonberg or Nick Nykulak to discuss your particular corporate needs.