Employment Arbitration Gets a Boost

March 22 -- Arbitration, long a valued tool for companies in resolving disputes with employees, has gained new importance following a high court ruling that employers can force workers into arbitration rather than having to go to court.

Business interests hailed Wednesday's 5-4 Supreme Court ruling, which held that companies can enforce employee arbitration agreements. Arbitration has increasingly been used to resolve a variety of workplace disputes, including employment discrimination claims. Employees are often required to waive their right to litigate and use the company's arbitration system as a condition of employment.

Arbitration advocates say employees can also benefit from the agreements. "There are advantages and disadvantages for both parties," said Mark Astarita, a New York securities attorney who has represented employees and employers in arbitration cases. "You wind up with a process that is as fair, with outcomes that, on a statistical basis, are very similar to what you'd get in a courtroom."

Added Astarita: "Some say [arbitration] favors the employer but it's also big plus for the employee because it eliminates one of the advantages that corporations usually have, which is that the company can afford to go to court and worker can't."

But Is Fairness Built In?

Critics, including trial lawyers, labor leaders and civil rights advocates, say the law doesn't require that arbitration be fair. And many companies take advantage of that shortcoming, said Lewis Maltby, president of the National Workrights Institute.

"When you go to court, the other side doesn't get to choose the judge. Frequently, the employer chooses the arbitrator," he said, citing a case in which an executive with the Hooters restaurant chain handpicked an allegedly sympathetic arbitrator to settle a dispute with an employee.

Maltby also cited a recent U.S. Labor Department study that found that the majority of employer arbitration plans did not meet minimum due-process requirements. Among the common flaws are provisions denying employees the right to submit evidence in arbitration hearings and prohibitions against the award of punitive damages to workers who win their cases.