Arbitration for All

I rarely agree with Harry Bernstein, but he was on the money in one portion of his Aug. 16 column (“Fire-at-Will Clauses Put Force of Law Behind Unfair Play”) discussing arbitration as a way of resolving employer-employee disputes. Too many employers and employees think that arbitration is limited to the union sector. It need not be. An increasing number of non-union employers have arbitration agreements with their employees. They divert from the courtroom disputes that are better resolved by objective, experienced employment professionals.

From the employer’s perspective, arbitration presents at least three advantages:

1) Arbitrators, unlike some juries, understand employment law and employee relations. Juries decide 75% of wrongful-dischrge cases for the plaintiff. Arbitrators, on the other hand, are more likely to give management a fair shake. They are sensitive to what former Supreme Court Justice Joseph Grodin called the need “not to interfere with the legitimate exercise of managerial discretion” and to allow the employer “substantial scope for the exercise of subjective judgment.”

2) Juries often impose unreasonable remedies, in the form of “emotional-distress” and punitive damages, that bear no relationship to a plaintiff’s economic losses. Arbitrators are accustomed to the traditional employment-law remedies of reinstatement and back pay. They can be expected to impose other forms of damages in more reasonable amounts and only in proper cases.

3) The costs of trying employment disputes before juries are absurd. The costs of defending even the simplest case run into the tens of thousands of dollars and a more complicated case into the hundreds of thousands. The process takes years. Allowing employment disputes to fester for years benefits no one.

Employers initially object to the thought of arbitration by saying, “We don’t want our management decisions to be continually second-guessed.” This concern is misplaced. A properly drawn arbitration agreement--unlike a union collective bargaining agreement--does not create substantive rights or foment litigation. It simply diverts to arbitration disputes that otherwise would be heard before courts or lay juries. Employment law now is such that many management decisions will be second-guessed by someone; the only questions is by whom. Bernstein’s column made a persuasive case that arbitration is the best forum for employees. It also is the best forum for management.

PAUL W. CANE JR.

Los Angeles

The writer is a management lawyer and a partner in Paul, Hastings, Janofsky & Walker.