The practice of requiring employees to sign mandatory arbitration agreements has become more widespread, and the enforceability of those agreements are routinely accepted by the courts. The pros and cons that are typically associated with arbitration include the following:
Avoidance of Juries: Conventional wisdom is that arbitrators tend to be both more predictable in decision making and reasonable in awarding damages. However, others argue that arbitrators tend to “split the baby.”
Less expensive? Some say yes, some say no. Attorneys’ fees may be reduced, but the costs shouldered by the employer for administering a private dispute resolution system may increase.
Private
Speed
Informality
Finality: No route to appeal absent exigent circumstances.
Potential Increase in Claims: Some employers have a concern that employees may pursue more claims if they can do so easily and relatively cheaply through arbitration.
More cases are decided on the merits than in traditional litigation. More cases settle through traditional litigation than go to trial.
Use of screening mechanisms such as pretrial motions are done away with.
However, lately, employers have been trying something different to get the best of both arbitration and the judicial system: Jury waivers. Dispute resolution with employees may return to a judicial forum without the uncertainty of a jury, and without having to shoulder the financial burdens imposed on employers for administering arbitration. Recently, the Texas Supreme Court ruled that an employer may make initial or continued employment conditional on an employee’s waiver of the right to a trial by jury. In In re Frank Motor Co., the Court found “There is no reason to treat the effect of the at-will relationship on a waiver of jury trial differently from its effect on an arbitration agreement. Arbitration removes the case from the court system almost altogether, and is every bit as much a surrender of the right to a jury trail as a contractual jury waiver.”
What This Means For You
If you currently require your employees to execute a binding arbitration agreement as a condition of continued employment, or you have been considering that alternative, you may wish to reconsider your practice and implement mandatory jury waivers. It could provide the best of both worlds.