The Sleazy Side of Arbitration
Arbitration is a common method of resolving employment disputes, but there is a sleazy side to the process. First, most employees are unwittingly duped into arbitration on their first day of employment when they sign a stack of forms and handbooks provided by Human Resources. Buried in these documents is an arbitration clause that most employees do not know about. But even if the employee was aware of the arbitration clause, they are powerless to remove it because they must agree to arbitration in order to get the job. So most employees do not truly enter into arbitration on a voluntary basis - instead they are either tricked or coerced into it.
But it gets worse. Once a dispute arises, employees are required to select an arbitrator. But employees typically know nothing about the arbitrators and there is no way to independently research an arbitrators history or prior dealings with the company. Employees are in the dark.
Employees also are not likely to select an arbitrator again so the arbitrators may feel more inclined to favor the company who is far more likely to need an arbitrator again. Not only are employers likely to be repeat customers, they are more comfortable with the process because they decided to use arbitration in the first place and they may even develop relationships with the arbitrators.
A recent case in Texas demonstrates the inherent unfairness of the process. In that case, the arbitrator had tried cases before involving the company, it's lawyer and even the same company representative. But the arbitrator did not disclose the prior relationship to the unsuspecting employee. After the employee lost his case, he somehow found out that the arbitrator had lied about his past dealings with the company. The arbitration was later reversed on appeal because of the arbitrator's misconduct, so the employee was lucky to get another chance. Read the post by the San Antonio Employment Blog for more details on the corrupt arbitrator.
However, the Texas case is unusual because most employees will never know about the arbitrators prior relationships. There is no public data base that records an arbitrators prior cases for employees to review. The employee in Texas somehow discovered the arbitrators prior relationships, but most employees will never know. Employees are generally forced to rely on an arbitrators honesty and willingness to disclose his or her past cases and relationships with the parties, and we know from the Texas case that arbitrators cannot always be trusted.
I have handled quite a few arbitrations and some of them have taken place in smaller cities around the country. In a few of these arbitrations, there was an almost clubby friendship between the arbitrator and the company lawyers - it was unnerving. However, many arbitrators are honest and fair and do excellent work. The problem is that the system is closed and employees are forced to rely upon an arbitrators integrity to disclose potential conflicts of interest. This is a flaw in the system. If employees are required to arbitrate their cases, at a minimum there must be an easy way for employees to independently verify an arbitrator's history.
