AAA Employment Arbitration: A Fair Forum at Low Cost

By Hill, Elizabeth | Dispute Resolution Journal, May-July 2003 | Go to article overview
Save to active project

AAA Employment Arbitration: A Fair Forum at Low Cost


Hill, Elizabeth, Dispute Resolution Journal


The debate over whether mandatory employment arbitration forces employees to give up civil rights has raged for more than a decade virtually without empirical support on either side. Elizabeth Hill recently completed a statistical study of employment arbitration under the auspices of the American Arbitration Association. Her results indicate that mandatory employment arbitration is not biased in favor of employers and that it is fair and affordable to lower-income employees. The author summarizes the major findings of her study in this article.

The debate over "mandatory" employment arbitration is one of the most important issues in arbitration and employment relations today. It has been the subject of three major Supreme Court decisions in the past decade, including a 2001 decision which held that "mandatory" arbitration agreements are generally enforceable.1 Mandatory employment arbitration has also been the subject of a vigorous national lobbying effort aimed at limiting its use.2 Surprisingly, the debate over the propriety of mandatory employment arbitration has been waged for a decade largely without the benefit of hard data describing it. Both critics and advocates of mandatory employment arbitration acknowledge the dearth in empirical research and agree that there is a need to fill the gap.3 This article describes my recent attempt to begin to fill that gap with a study of 200 employment arbitration cases, which were decided under the auspices of the American Arbitration Association (AAA), the largest independent provider of arbitration services in the United States. My research was not intended to prove a hypothesis, but to provide a comprehensive statistical description of AAA employment arbitration based on the data derived from the 200 individual awards. At the end of the day, my findings, which are detailed below, indicate that AAA employment arbitration is affordable and substantially fair to employees, including those employees at the lower end of the income scale.4

The Controversy Over "Mandatory" Employment Arbitration

What are commonly known as mandatory arbitration agreements are found in arbitration clauses in employment agreements or employment applications or in the arbitration policy of an employee handbook. A person who is seeking employment is required to sign an arbitration agreement, or an express acknowledgment of an arbitration policy in an employee handbook, before being hired. In this way, a prospective employee gives up the right to take employment-related disputes to court and agrees instead to arbitrate these claims with the employer. Consequently, once an employee is hired, disputes must be arbitrated, if they are not settled first. Most often, the arbitration agreement provides that the arbitrator's decision is final and binding. Thus, it is enforceable in the courts and there is limited appeal.

The use of private employment arbitration has grown dramatically over the past decade. The percentage of employers in the private sector using employment arbitration increased from 3.6% in 1991 to 19% in 1997.5 Studies mdicate that by 1998, 62% of large corporations had used employment arbitration on at least one occasion.6 Further, in just four years between 1997 and 2001, the number of employees covered by employment arbitration plans administered by the AAA grew from 3 to 6 million.7

Just as strong as the growth in private employment arbitration has been the opposition to it. Employees' advocates, civil rights' advocates and the plaintiff's bar strongly oppose the practice as unfair. In their view, employers unfairly take advantage of superior economic power to force prospective employees to sign away their constitutional rights to due process and trial by jury-hence the term mandatory employment arbitration.8

Employers have maintained that employees have sufficient economic power to voluntarily negotiate the terms of their employment. Moreover, employers believe that arbitration provides employees with a generally fair forum at relatively low cost, because most employees cannot afford to take their cases to court due to the high cost of an attorney.

The rest of this article is only available to active members of Questia

Sign up now for a free, 1-day trial and receive full access to:

  • Questia's entire collection
  • Automatic bibliography creation
  • More helpful research tools like notes, citations, and highlights
  • Ad-free environment

Already a member? Log in now.

Notes for this article

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
Loading One moment ...
Project items
Notes
Cite this article

Cited article

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

Cited article

AAA Employment Arbitration: A Fair Forum at Low Cost
Settings

Settings

Typeface
Text size Smaller Larger
Search within

Search within this article

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

While we understand printed pages are helpful to our users, this limitation is necessary to help protect our publishers' copyrighted material and prevent its unlawful distribution. We are sorry for any inconvenience.
Full screen

matching results for page

Cited passage

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

Cited passage

Welcome to the new Questia Reader

The Questia Reader has been updated to provide you with an even better online reading experience.  It is now 100% Responsive, which means you can read our books and articles on any sized device you wish.  All of your favorite tools like notes, highlights, and citations are still here, but the way you select text has been updated to be easier to use, especially on touchscreen devices.  Here's how:

1. Click or tap the first word you want to select.
2. Click or tap the last word you want to select.

OK, got it!

Thanks for trying Questia!

Please continue trying out our research tools, but please note, full functionality is available only to our active members.

Your work will be lost once you leave this Web page.

For full access in an ad-free environment, sign up now for a FREE, 1-day trial.

Already a member? Log in now.

Are you sure you want to delete this highlight?