Due to the explosion of civil litigation and administrative charges against employers, it is not surprising that alternative dispute resolution (ADR), and particularly binding arbitration, has grown more popular. Employers perceive ADR as the solution to problems of expensive discovery, protracted litigation and runaway jury verdicts.
Both the Americans with Disabilities Act and the Civil Rights Act of 1991 encourage the use of ADR. In addition, in recent years the Supreme Court has repeatedly endorsed arbitration of employment discrimination claims and workplace issues, and the overwhelming majority of courts have upheld arbitration provisions in ordinary employment contracts, partnership agreements and employee handbooks and have ordered parties to submit their statutory employment discrimination claims to arbitration in accordance with their agreement to do so. However, employees continue to challenge mandatory pre-dispute arbitration agreements based on fairness to employees, who give up their rights to have their claims addressed within the courts. In order to help increase the likelihood that their arbitration policy will be considered "fair" and will withstand such challenges, employers should keep the process, the cost and the available remedies substantively similar to those available to employees in court.
An employer should ensure that its policy provides employees equal access to ADR as they have to the courts. This policy should provide for a neutral third-party decision-maker mutually chosen by the parties, the right to counsel, discovery and remedies equal to those available to a party in court. While not every deviation from statutory remedies will result in a blanket refusal to enforce an agreement to arbitrate, employers with arbitration agreements that do not authorize the arbitrator to award the employee all of the remedies available under a federal statute run the risk of not having their arbitration clauses enforced or having their arbitration awards overturned.
Employers should also ensure that the fees that an employee is responsible for paying in arbitration are no greater than those to bring a cause of action in court. For instance, an employee who pursues his rights in federal court must pay a $150 filing fee, compared to an arbitration fee that can be thousands of dollars depending on the amount of relief sought. Likewise, parties involved in arbitration must pay for the arbitrator's daily fees while there is no cost for a judge in court. Therefore, in order to ensure that employees are not effectively denied a forum because of the cost of arbitration, employers should consider paying the arbitrator's fee and the filing fee for arbitration or capping the employee's portion of such costs.
Employees often attempt to challenge mandatory arbitration clauses by claiming that they did not knowingly and voluntarily enter into the agreement to waive their right to trial in court. To best ensure that they can prove that an employee knew about the arbitration agreement, employers ideally should have an agreement, separate from their handbook, signed or initialed by employees in which they consent to arbitrate specified disputes. Although the Supreme Court has ruled that a broad designation in an arbitration provision of "all claims" is sufficient to define what claims are subject to arbitration, to provide the greatest safeguard, all claims that are subject to arbitration should be specifically spelled out.
The laws governing ADR continue to evolve. Although mandatory pre-dispute arbitration agreements are regularly challenged, the clear trend among courts is to enforce such agreements if they merely provide a different forum for employees to address their claims, without requiring them to give up their rights.