Employer-Imposed Arbitration

September 9, 2011
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Many employers have inserted mandatory arbitration provisions into their Handbooks.  These provisions require employees to submit all employment-related claims to binding arbitration.  Typically, such provisions look to the American Arbitration Association (AAA) Employment Rules to govern the arbitration proceedings.  

Until fairly recently, an employee filing an employment-related claim with AAA against his or her employer would have had to pay thousands of dollars in filing fees and arbitrator fees attempting to prosecute such claim.  However, a few years ago AAA amended its Employment Rules to require the employer to pay all but $175 of the arbitration fees if the claim was presented to AAA pursuant to an “Employer-Promulgated Plan” for arbitration.  

Should employers continue to insist in their Handbooks on binding arbitration of employment-related claims with AAA when the cost to the employer of such arbitration (not including the employer’s own attorney fees) could be tens of thousands of dollars?  Is the historical benefit of arbitration (e.g., avoiding runaway jury verdicts) worth such a substantial monetary investment?  Are there ways of compelling arbitration without incurring such costs?

Please do not hesitate to contact Robert M. Sosin at Alspector, Sosin & Noveck, PLLC to discuss these and any other employment matters that may affect you.