Arbitration of Employment Issues: Its History and Growing Use
by cjleclaire
 Stephen Hans Blog
Feb 26, 2020 | 35222 views | 0 0 comments | 1723 1723 recommendations | email to a friend | print | permalink

How Employment Arbitration Became Widespread

Arbitration of employment issues was rare before the 1990’s. In fact, in 1992, a little more than 2 percent of the U.S. workforce was subject to mandatory arbitration for employment disputes.

A study done by the Economic Policy Institute showed that use of mandatory arbitration rose after a series of Supreme Court decisions that began in 1991.

To What Extent Has Arbitration of Employment Issues Grown?

The following statistics show the increase of the mandatory arbitration in employment issues:

  • During the early 2000s, mandatory employment arbitration doubled
  • Today, more than 55 percent of employees must undergo mandatory arbitration
  • An estimated 53.9 percent of nonunion private-sector employers use mandatory arbitration.
  • A greater percentage of companies with 1,000 or more employers use mandatory arbitration. (65.1 percent)
  • More than 60 million workers in the U.S. cannot sue but must arbitrate disputed employment issues

Class Action Waivers in Arbitration Agreements

One of the more recently disputed issues regarding mandatory arbitration has been regarding class action litigation. Employers began incorporating class action waivers in their mandatory arbitration agreements. A class action or collective lawsuit taken against an employer would seek damages for all employees in that class. For example, a sexual harassment lawsuit could seek compensation for a whole class of plaintiffs that were sexually harassed.

Being forced to arbitrate a class action complaint could be very costly for employers and would complicate the direct, simplified nature of arbitration. For this reason, employers began including waivers in the agreements. The disputed legal point addressed whether mandatory arbitration included class action matters.

The Supreme Court ruled that unless both parties explicitly consented to arbitrating a class action complaint, mandatory arbitration would not apply to class action issues.

Stephen Hans & Associates can assist you in complying with employment and labor laws and drafting employment agreements. We can also represent you in employment litigation or alternative dispute resolution cases.


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