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The problem with arbitration is bias. Companies volunteer to hire the arbitrator and the arbitrator routinely rules in favor of the companies because they know
by vivekd 8y ago
The problem with arbitration is bias. Companies volunteer to hire the arbitrator and the arbitrator routinely rules in favor of the companies because they know where the money is coming from.
The problem then seems to be not the idea but the implementation. If we could get rid of the bias, arbitration could be an effective solution to resolving workplace disputes in a manner much faster, cheaper and with less headaches than courts.
The problem of bias in arbitration doesn't seem like an insurmountable one to me. Imagine if both the employee and the employer had to agree to an arbitrator or arbitration company - failing which the matter has to go to a state run court.
Imagine if there was a rating system - where people or lawyers can rate arbitrators on their fairness and knowledge of the law.
Arbitration is widely used in b2b settings. The problem with employee employer arbitration isn't the arbitration itself, it's the power imbalance and the employers control of the arbitrator.
What legislation should target is employers who control arbitrators and use them as a rubber stamp court.
- ThrustVectoring 8y agoIt's not just bias. Most disputes are settled through negotiation rather than arbitration or a lawsuit. The results of negotiation depend on the parties' BATNA, or Best Alternative To Negotiated Agreement. If the company's BATNA is forcing you through cheaper binding arbitration rather than a more expensive lawsuit, you're not going to get as good of settlement offers in lieu of the formal dispute resolution process. Another way of thinking about it: reducing the price of formal dispute resolution will cause induced demand. There are disputes that employers would send to arbitration if possible and settle out-of-court if not. It's not necessarily the case that making dispute resolution cheaper per case resolved will result in less money spent on it in aggregate.
- jdsully 8y agoThis is the first time I've heard an argument for the crazy high cost of the US court system. Realistically though the BATNA is no lawsuit at all because the plaintiff can't afford it.
- ThrustVectoring 8y agoLawyers will take strong cases against deep-pocketed defendants on contingency, obviating that need.
- jdsully 8y agoThat's only for the most obvious of cases lacking any nuance. Further in such cases the lawyers take much of the recovered so the plaintiff collects pennies on the dollar - while risking their professional reputation. Its a matter of degree, Companies know they can screw employees under a certain amount where its not worth it to challenge them in court. With court costs as high as they are that amount is in the tens of thousands of dollars.
- vivekd 8y ago>If the company's BATNA is forcing you through cheaper binding arbitration rather than a more expensive lawsuit, you're not going to get as good of settlement offers in lieu of the formal dispute resolution process. That's only because of the bias in the current system. Ideally, given a set of facts and law, a damage calculation should be fairly objective. Thus both the arbitrator and the judge should come to similar outcomes. Because of this, settlement in a fair arbitration system should come pretty close to settlement in the courts. The reason pre-arbitration settlements are ineffective is that the arbitration system is broken. It's being used as a rubber stamp court by the institutions that pay the arbitrator's salary. Thus there is little incentive for them to settle at any reasonable amount. In a fair arbitration there would be an incentive to settle because the employer would not control the arbitrator and thus the outcome. I grant that perhaps settlements in arbitration may still be a bit lower than settlements in the courts because the huge time and cost investment are no longer a factor . . . but that's hardly a bad thing.
- SamReidHughes 8y agoIn all employment arbitration agreements I’ve read, the employer did not have control of who the arbitrator is. I’ve read... several.