Overview: Arbitration is a voluntary dispute resolution process that is available to employers with both unionized and non-unionized employees. While many collective bargaining agreements (CBAs) include arbitration clauses, private employers with non-unionized workforces may also create arbitration programs to handle employment claims. The voluntary nature of arbitration requires, however, that both the employer and the employees agree to arbitrate their claims. If the parties are in agreement, either before or after the incident occurs which requires resolution, arbitration is an extremely useful tool for employers seeking to reduce their litigation costs and their exposure to litigation.
The Federal Arbitration Act (FAA) legitimizes interstate arbitration agreements by elevating them to the same legal standing as employment contracts. Thus, the FAA provides employers with substantial legal authority from which to build arbitration agreements and, depending on whether the agreements are enforceable, arbitration can be used to handle many types of costly employment disputes. Importantly, employers must be familiar with both the FAA and state law pertaining to arbitration procedures, if any, in order to ensure that arbitration programs and awards are legitimate and binding on the parties.
Trends: While private employers with a non-unionized workforce have other dispute resolution methods available to them like mediation, employers are increasingly moving toward arbitration because it typically involves a binding decision by the arbitrator which the parties must accept. This fact, combined with a typically narrow arbitrator selection process, may convey an advantage to the employer. In most cases, arbitration can deliver a fair and binding result, while substantially reducing costs associated with litigation, including investigative fees and attorney's fees.
Employers with a unionized workforce typically opt to negotiate for labor arbitration clauses to be contained in CBAs as a cost-reduction and efficiency measure. Labor arbitration includes a formalized process of selecting an arbitrator, presenting information to the arbitrator, and of course, the receipt of a binding arbitration award from which appeals are only permissible if the award was fraudulent, the arbitrator exceeded his or her authority or the arbitrator committed misconduct.
Author: Michael Jacobson, JD, Legal Editor
Updated to include information on a circuit court ruling regarding the National Labor Relations Act and class action waivers in arbitration agreements.
This podcast examines new laws expanding California's equal pay statute, restricting E-Verify use and a flurry of minimum wage increases that are sure to impact employers in 2016. Anthony Oncidi, who heads the labor and employment practice group at Proskauer Rose's Los Angeles office, discusses the most significant developments.
California Governor Jerry Brown has signed into law significant changes to the state's equal pay statute, leading him to call it, "The strongest equal pay law in the nation." Equally notable was Brown's veto of a bill that would have outlawed the use of mandatory arbitration agreements as a condition of employment.
This section helps HR professionals understand the alternative dispute resolution process, including mediation and arbitration, that allows HR and unions to resolve labor disputes in an expedited manner.
The California Supreme Court has handed a victory to employers in a case involving an employee's alleged misuse of medical leave. In Richey v. AutoNation, Inc., the Court found that an employee out on leave is not entitled to a greater right to reinstatement than other employees.
A federal district court ruled employers that use arbitration agreements should keep them out of employee handbooks, in order to avoid disputes over the enforceability of their agreements.
While the Supreme Court's ruling on the Defense of Marriage Act has drawn the most attention, other key opinions from the 2012-2013 term also affect HR. In a new podcast, our editorial team examines a pair of wins for employers in cases involving Title VII of the Civil Rights Act--Texas Southwestern Medical Center v. Nassar and Vance v. Ball State - plus much more.
A Florida appeals court held that specific language in an arbitration agreement meant that the employer could arbitrate a workers' compensation retaliation claim, while preserving an exception the employer created to avoid arbitrating workers' compensation benefits claims.
The Arbitration section of the Investigations and Litigation chapter of the Employment Law Manual has been enhanced to include a discussion of several court decisions addressing conflicts between mandatory arbitration programs and either federal or state laws. Employers that use arbitration agreements or mandatory arbitration programs should review this material to ensure their arbitration agreements remain enforceable and that they cover the appropriate causes of action.
HR guidance on the benefits of creating arbitration programs and how arbitration programs can help employers reduce costs and exposures associated with litigation.