Employment Arbitration: The Repeat Player Effect

Abstract

Abstract This article addresses employment arbitration, which is emerging as a controversial method for resolving disputes between employers and employees not represented by a union. Employment arbitration holds great promise as a dispute resolution process for employees who otherwise would never have a hearing on their claims against an employer. However, critics argue that mandatory arbitration is a new corporate tool used to advantage by large companies against consumers, employees, and other “little guys.” In particular, critics caution that in the absence of a union, the process is skewed against the employee, particularly the unrepresented employee. Some have expressed concern that, as institutional repeat players who will use the arbitration process for multiple cases, employers have an advantage over employees, who are unlikely to use it more than once or twice in their lifetimes. The article determines whether there is a measurable repeat player effect, examines possible explanations for its existence, and identifies policy issues for employment arbitration that are raised by the effect.