Arbitration Agreements Are Worth Considering
As you’re about to be hired, your prospective employer tells you that if you want the job you must agree to submit any future legal dispute against the company to mediation or arbitration. If you don’t sign, no job. If you do sign, you waive your legal right to sue in a public court and must trust to an arbitrator or mediator for a fair hearing.
Do you smell fish?
In a court, you’ll probably get a fair judge, maybe even a sympathetic jury, possibly a good or generous settlement.
The flip side is that you probably can’t afford to hire a lawyer by the hour, so if you do win in court, your lawyer will pocket one-third of your award. And it could be years before your case is heard.
By agreeing to an employer’s alternative dispute resolution system, your case will be heard quickly. If an arbitrator or mediator is used, you might still get a level playing field.
Anxious to be hired, you might just say, “Where do I sign?”
But since doing so could affect your fortune and your fate, you might want to consider saying, “I’m no lawyer. You’re going to have to explain to me just how your system works. Then I’ll need to show it to my lawyer.”
Alternative resolution systems come in more designs and colors than Ukrainian Easter eggs. For a guide, you might want to look at a “protocol” hammered out by the American Bar Assn. and other litigation experts. The ABA formed a National Task Force on Alternative Dispute Resolution with the American Arbitration Assn., prominent corporation and labor lawyers, and civil libertarians.
Their findings on company systems are summed up by the panel’s co-chair, Max Zimney, general counsel for the International Ladies’ Garment Workers’ Union, in New York:
“We have come out in favor of alternative dispute resolution systems. We believe they can serve an important purpose in the nonunion workplace if such systems provide for fairness and due process for the people involved.”
“Most people with an employment dispute today get no justice because they can’t afford to go to court,” added panelist Lew Maltby, director of the Workplace Rights Office of the American Civil Liberties Union. “Private arbitration can help, but only if it’s fair. These guidelines are a big step in that direction.”
One gap in the guidelines though, is that the panelists couldn’t agree among themselves on whether an employee should have to sign away the right to sue in court as a condition of being hired.
Some employers already require it. Others tell applicants the company system is voluntary: “You can go the arbitration route or not, it’s up to you.”
Overall, the new Task Force’s “due process” guidelines are worth reading. They describe how employees can pick who will represent them, who pays the legal bills, how arbitrators are trained, picked and paid for, and warn of potential conflicts of interest.
You might profit by comparing them with your prospective employer’s plan.
Under some arrangements, said Fred Wood of the ABA’s Washington office, an employee can have an attorney at his or her side during mediation. “If the [company] rules allow it,” he said, “the employee can say ‘I want an attorney there to represent me.’ ”
A system that does not provide for this might be amended, Wood said. Or, the lawyer might not actually represent the employee, but “they could pass notes and the lawyer could advise.”
Well, you ask, why should a company want a suit against it to be heard by an arbitrator or mediator now, instead of three years from now?
It’s simple: cost.
In a lengthy court suit, “even when they [employers] win, they lose,” is how one lawyer put it. Besides, juries have been known to hand plaintiffs some big green bundles.
Another possible answer: If you sue your employer in a public court, the press can cover the case. With arbitration or mediation, “there is no public access [to the proceedings],” Zimney said. Moreover, if either party to the dispute doesn’t want the arbitrator’s decision published, it doesn’t get published.
This way, an employer guilty of wrongdoing, say, on a racial or sexual bias charge, might conceal it from public scrutiny--rejoicing even in a lost case because the company will emerge with its reputation untarnished.
Unionized workers have long had arbitration rules written into their bargaining contracts. Employees affected by the new trend to Alternative Dispute Resolution will be the 100-million nonunion workers, particularly in big companies.
