Employee Risk Management – Arbitration may not always be the best avenue

risk managementCompanies have long sought to avoid the expense and at times the unpredictable outcomes of jury trials that “may” be swayed more by emotion than facts and perhaps the risk of excessive punitive damages juries sometimes award by having employees waive their right to a trial by jury and agree to settle disputes in arbitration.

Yet arbitration is not without risk nor is it a free ride.

  • Arbitrators are selected by both parties and their attorneys and obviously earn their fees arbitrating disputes.  In some circles it has been debated that there could be a tendency for arbitrators to “split the difference”, and perhaps promote their chances of being selected again by any of the participants that selected them in your dispute.  Perhaps if the case against is strong that could be a mitigating factor, yet if there is any substance to the debate, and you’re up against a baseless claim arbitration could work against your best interests.
  • Administrative fees plus arbitrator fees that can run $300 – $800 per hour and typically paid at least 80% by the employer can add up …  $20,000, $30,000, $40,000 or more vs. a bench trial before a judge that may be less susceptible to emotional elements than jurors that are not regularly involved in legal process.

Ian Siminoff offers some good tips in his article Jury Trial Waiver: The Less-Traveled ADR Alternative on ways you might consider to mitigate your risks.

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