The Black Hole of Mandatory Arbitration

Abstract

What is the impact of mandatory arbitration agreements (MAAs) in employment? It is now several decades since the Supreme Court gave a green light to employers’ imposition of broad MAAs that foreclose litigation over nearly all federal and state employment claims. Since then, scholars have labored to develop a clear empirical picture of the shape and impact of arbitration. From the growing body of data on arbitration, this Article underscores one crucial point: The great bulk of employment disputes that are subject to MAAs simply evaporate before they are ever filed. They are “MIA,” or “missing in arbitration.” That conclusion emerges from a comparison of the tiny number of employment claims that are filed in arbitration with an estimated number of claims one would expect to see given the number of employees who are covered by MAAs and the volume of employment litigation by those who are free to litigate. The implications for employee rights are dire: Mandatory employment arbitration, at least as it has evolved under the Federal Arbitration Act, functions less as a mechanism of “alternative dispute resolution” than as an ex ante waiver of legal rights by employees and a means of self-exculpation by employers.

Keywords: employment law, arbitration, dispute resolution