What are the pros and cons of mandatory arbitration programs from the employer's perspective?

Author: Michael C. Jacobson, XpertHR Legal Editor

Mandatory arbitration programs help employers avoid litigation, lengthy discovery processes, jury trials and lengthy appellate processes, thereby substantially reducing an employer's litigation costs and exposure to large verdicts. Arbitration proceedings are almost always private, which allows employers to maintain confidentiality regarding the details of employment disputes. Additionally, arbitration proceedings are also typically faster, more efficient and outcomes are more likely to turn on the merits of the claim, rather than on some vague evidentiary or procedural court rule or the whims of jurors.

On the other hand, mandatory arbitration rulings are usually final and reduce the ability of a party to take an appeal from an adverse ruling. In rare cases, highly effective arbitration programs may even raise the number of claims directed at employers, given the efficiency and accessibility associated with well-run plans.

Nevertheless, an effective mandatory arbitration program should significantly reduce an employer's litigation costs and exposure to employment litigation verdicts. And if well-run plans produce a high number of claims, that may be indicative of other problematic employment practices, as opposed to the arbitration program itself.