Union Representation in Employment Arbitration

Abstract

Employers in recent years have promulgated arbitration programs to resolve disputes with their present and former employees. Arbitration may in many cases provide a lower-cost forum than litigation for resolving such disputes. But the problem of representation of Americans of modest incomes still remains. Ann Hodges explores in this chapter whether labor unions can help address that representation gap. In the 1980s, the Supreme Court began to enforce agreements to arbitrate statutory claims. The cases involved arbitration agreements between businesses of roughly equal bargaining power. Businesses, however, seized on the judicial approval of arbitration of statutory claims and began to include arbitration agreements in contracts of adhesion with employees and consumers. Arbitration agreements deprive the parties of jury trials. They may limit discovery and other procedures available in court. Perhaps most importantly, they may limit the ability to bring a class action suit, rendering many smaller claims uneconomical. With their long history of representing employees in arbitration, unions have an opportunity to provide representation for employees in these cases, enhancing their ability to enforce their legal rights. Private attorneys who represent employees are rarely attracted to individual arbitration cases because of the often limited potential for damages. In contrast, unions can offer representation as a benefit to recruit new employee members. Additionally, representation in arbitration can become part of a campaign against employer-imposed arbitration systems that limit the legal rights of employees. Accordingly, unions should explore cost-effective methods of providing such benefits to enhance workplace justice. ARBITRATION OF EMPLOYMENT DISPUTES For the employer, the arbitral forum offers certain advantages over litigation. It is not public, it is faster and often cheaper than litigation, and the case is not heard by a jury, which may be more sympathetic to an employee than a business. There is some evidence that employers who are sued in arbitration more than once benefit as repeat players in the system. Large employers have this advantage in both arbitration and litigation, although it is plausible that arbitrators may favor such employers if viewed as a source of repeat business. Over time, the employee bar has organized, which can balance the employer's repeat-player advantage for employees who use experienced employment lawyers. And, of course, the class action limitations are extremely valuable, particularly where the employees’ claims are of low value individually but large value collectively.