Labor and Employment Arbitration: What's Justice Got to Do with It?

By Nolan, Dennis | Dispute Resolution Journal, November 1998 | Go to article overview

Labor and Employment Arbitration: What's Justice Got to Do with It?


Nolan, Dennis, Dispute Resolution Journal


A well-designed employment at arbitration system for statutory disputes "can provide the same type and degree of justice to employers and employees as labor arbitration has traditionally provided to parties in contractual disputes," says the author. The system, however, must contain four elements before a reviewing court will find it enforceable and exclusive. Here is a comprehensive look at the author's four vital ingredients for a successful program as well as the employment issues-primarily involving matters of justice-that remain to be addressed by the courts.

This article addresses the coming third generation of cases dealing with individual employment arbitration. The first generation climaxed in the Supreme Court's 1991 decision in Gilmer v. Interstate/Johnson Lane.' Gilmer unequivocally established the general legitimacy and enforceability of pre-dispute agreements to arbitrate individual statutory claims. The second generation of cases, which continues today, largely completed the extension of Gilmer to other sorts of statutory claims, to other sorts of employers, and to other sources of arbitration agreements. Until the Supreme Court speaks again, the landmark case of the second generation is likely to be Judge Harry Edwards' 1997 opinion in Cole v. Burns International Security Services.' Cole and other cases adopted a narrow interpretation of the Federal Arbitration Act's exclusion of contracts of employment and declined to draw distinctions between the statute involved in Gilmer (the Age Discrimination in Employment Act-ADEA) and other individual rights statutes.3 Those cases also worked through most aspects of the "consent" issue, holding that employees who accept an arbitration agreement are bound by it.

To be sure, a few courts are still fighting what seems to be a rearguard action to stop the advance of employment arbitration. In a notable series of decisions, the 9th Circuit has held that arbitration agreements must be more "knowing" and "voluntary" than other courts demand;4 that the securities industry arbitration agreement approved by the Supreme Court in Gilmer is not enforceable on the West Coast; and, most recently, that the 1991 amendments to the Civil Rights Act of 1964 bar mandatory arbitration of rights provided by that Act.6 Virtually all other circuits take a more sympathetic view of employment arbitration,7 so it will take Supreme Court decisions to bring the second generation to a close.

Now, however, the federal courts face a third generation of employment arbitration cases. The employment issues still to be resolved primarily involve matters of justice, broadly considered. The overarching question is what substantive and procedural elements are necessary before reviewing courts will find an employment arbitration agreement enforceable and exclusive. To answer that question, it is first necessary to consider just what labor and employment arbitration seek to do, and how (and how well) they have accomplished their objectives. This inquiry focuses on what justice means in these two settings and how each is structured to achieve it. The final section of this article discusses four elements an employment arbitration system must contain before a reviewing court will find it enforceable and exclusive. I conclude that a well-designed employment arbitration system for statutory disputes-that is, a system containing the four necessary elements-can provide the same type and degree of justice to employers and employees as labor arbitration has traditionally provided to parties in contractual disputes.

Objectives of Labor and Employment Arbitration

Like other forms of dispute resolution, the fundamental purpose of any arbitration system is to do justice between the parties. Exactly what "justice" means in a given situation depends on the context and on the system's objectives.

A. Labor Arbitration

Labor arbitration's objective has changed dramatically over the last half century. …

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