A Normative Consideration of Employment Arbitration at Gilmer's Quinceanera

Abstract:     
In the fifteen years since the Gilmer Court permitted employers to compel employees to arbitrate statutory claims, empirical research and case law development have provided answers to many of the issues that originally were debatable only as a matter of conjecture. Arbitration is definitely faster than litigation, it can be cheaper for both parties so long as excessive fees are not levied on employees, and it can significantly enhance access for low-income employees so long as the arbitration agreement is fairly drafted. One major criticism of employment arbitration, however, has proven valid: many employers have used their superior bargaining power to impose on employees lopsided agreements that make it all but impossible for employees to pursue valid claims and that deter many employees from even trying to do so. This deterrent effect undermines the access argument for arbitration and strengthens the criticism that arbitration functions as a prospective waiver of substantive rights.

Two things must happen before mandatory arbitration becomes an acceptably fair method of adjudicating employment disputes. First, there must be a clear set of "due process rules" against which arbitration agreements can be measured to determine enforceability. Second, a penalty must be imposed on employers that draft flagrantly lopsided agreements, to counteract the incentives employers now have to use lopsided agreements to deter valid claims. Such a penalty might be imposed by awarding attorneys' fees to employees who successfully challenge lopsided agreements, permitting employees to use lopsided agreements in claims for punitive damages, or recognizing a separate cause of action (similar to retaliation) against employers for attempting to interfere with the enforcement of employees' statutory rights.

Keywords: arbitration, arbitration, statutory

JEL Classifications: J7, J52, K32

Accepted Paper Series