Mandatory Arbitration of Employment Disputes

Abstract

While there's no definitive answer as to whether mandatory-arbitration policies for employment disputes are universally enforceable, many courts have allowed such provisions to stand. To ensure enforceability, however, such a policy should meet certain standards of fairness. Specifically, an arbitration policy should provide that (1) the procedure for selecting arbitrators is fair and impartial; (2) evidence and documentation of the facts of the matter are permissible and sufficient; (3) the damages available to the complainant are in keeping with allowable statutory awards; (4) the outcome will be provided in writing; (5) the agreement is fully disclosed to employees such that it can be entered into knowingly and voluntarily by the employees; and (6) there is no confusion regarding what employment issues must be resolved through arbitration. Mandatory arbitration cannot, however, preclude employees from filing a complaint with the Equal Employment Opportunity Commission. Some courts have also created confusion regarding whether unionized employees with a collective-bargaining agreement should be treated differently from non-union workers with respect to mandatory-arbitration policies. In general, unionized employees may bring suit in federal court despite the existence of a mandatory-arbitration policy whereas non-union workers may not, provided the mandatory-arbitration agreement is deemed to be enforceable.