Arbitration

Author: Jeffrey Zaino, American Arbitration Association

Updating Authors: Michael C. Jacobson, XpertHR Legal Editor and Gloria Ju

Summary

  • Both parties to an employment dispute desire a fair, efficient and cost-effective resolution of the case. Increasingly, employers and employees are turning to arbitration as an alternative to filing a lawsuit, given the efficiency, cost-effectiveness and reduced emotional toll. See Arbitration, Generally.
  • In arbitration, the parties agree to submit their dispute. See The Legal Basis for Arbitration.
  • The arbitration agreement is the source from which all rules and guidelines pertaining to arbitration are generally derived. Employers have some leeway in drafting arbitration agreements and should strive to draft them in a way that benefits the organization, while also staying in compliance with applicable regulations. See The Arbitration Agreement.
  • Not all arbitration agreements are enforceable. Employers should familiarize themselves with the limitations and exceptions to the validity of arbitration agreements, which are grounded mostly in case law. See Enforceability of Arbitration Agreements.
  • Despite enforceability, some arbitration agreements may not cover all of the claims intended to be addressed by arbitration from the employer's perspective. It is important for employers to craft their arbitration programs so that the programs cover all of the claims the employer intended to have addressed by arbitration, while also conveying the coverage to employees accurately, to ensure that they are fully informed regarding the implications of the program. See Coverage of Arbitration Agreements.
  • The process of an individual arbitration is largely controlled by the arbitration agreement and/or the terms of the employer's alternate dispute resolution program. See The Process of Arbitration.
  • Labor arbitration pertains to unionized employees and is typically governed by the terms of a collective bargaining agreement (CBA). See Labor Arbitration.
  • When disputes arise regarding the terms of an existing contract between an employer and its employees, or even as to the negotiations regarding a future contract, the resulting dispute resolution process is called rights arbitration. See Rights Arbitration.
  • When disputes arise concerning the specific terms of a collective bargaining agreement (CBA) or pertaining to the negotiations of a new CBA, the resulting dispute resolution process is called interest arbitration. See Interest Arbitration.
  • In 2014, the National Labor Relations Board (NLRB) overhauled its standard for deferring to arbitration awards. See Arbitration Awards and the National Labor Relations Board.