No Day In Court

Firms are making workers pursue disputes through arbitration.

Do You Think the United States is becoming an increasingly litigious society? If so, you've got lots of company. Indeed, court filings are steadily on the rise. Contrary to popular belief, however, the clutter on court dockets arises not from allegedly frivolous medical malpractice or product defect cases, but from disputes and disagreements between businesses. For better or worse, the waste industry — haulers, vendors, suppliers, contractors — is just another subgroup of plaintiffs and defendants.

Bucking this trend, a growing number of companies are taking the initiative in limiting and even eliminating their exposure to employment-related litigation by cutting off access to the courts. Employee handbooks, not to mention other company policy statements, now typically state that workers who have claims and grievances must pursue them through arbitration.

Arbitration procedures do not involve a judge or a jury. Disputes are resolved by a single individual, usually someone with a law degree whose decisions are, with a few exceptions, final and binding on the parties. Arbitration is different from alternative dispute resolution (sometimes referred to as mediation), which is a nonbinding process involving negotiation and settlement that is facilitated by a neutral third party.

As a general rule, the business community views arbitration as a desirable alternative to litigation. For one thing, arbitration proceedings are faster and cheaper than litigation. Discovery — the time-consuming (read: expensive) evidence-gathering process that precedes in-court testimony — is severely curtailed in arbitration. For another, the proceedings themselves and the amount of the award the claimant receives are generally not made public. Notably, arbitration awards cannot be easily appealed, which speeds enforcement and reduces delay.

The courts, for their part, embrace and support arbitration — if for no other reason than because it contributes to reducing caseloads. Lawyers for claimants, not surprisingly, disparage the process because it tends to produce lower monetary awards than a worker might expect through litigation. Moreover, they say, the closed, quiet process favors employers who would prefer to keep mum on workers' dissatisfaction.

Last July, Sens. Russell Feingold, D-Wis., and Richard Durbin, D-Ill., introduced the Arbitration Fairness Act of 2007 (S.1782), which would outlaw pre-dispute arbitration agreements affecting employment, consumer, franchise or civil rights disputes. Observers think the likelihood of passage is slim.

Employers can interject arbitration requirements early in the hiring process. A job seeker might find that his or her signature on an application form amounts to a waiver of any right to take workplace-related disputes to court if and when employment begins. Current workers could find a memo from management announcing an arbitration-only policy. For example, it might read: “After next payday, your remaining with the company will be deemed acceptance of this limitation on your remedies.”

As this column often reminds readers, laws vary from state to state. Employer rights and prerogatives differ accordingly. Some courts require employees to affirmatively consent to arbitration, and some do not.