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.
It'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.
>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.
That'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.
“No worker is safe until all workers are safe. No consumers are empowered until all consumers are empowered,” said Tanuja Gupta, one of the organizers of the Google Walkout and a member of the spinout group End Forced Arbitration at a press conference in DC announcing today’s legislation. “We call on Congress to quickly pass the Forced Arbitration Injustice Repeal Act.”
Gupta ( if you know who it is) can not be sure of it..
A better question: what % of employees are (often unknowingly) covered by forced arbitration clauses.
Google employees have an advantage over lower wage workers because in america people with money are more important to legislators than those with less.
Um, forced arbitration is deliberately chosen because it is
a) biased in favor of the company
b) For lower income workers costs much more than the potential "win" for getting back what you are owed - the typical case being stolen wages, that are often less then the employee born cost of arbitration.
c) They prohibit the constitutional right toclass action law suits - combined with (b) this makes mass already illegal exploitation essentially free: it's just not cost effective for victims to to individually litigate their minor costs.
Hold on. I'm all for ending forced arbitration, but b here is wrong.
Costs of arbitration after borne almost entirely by the company. This makes it cheaper to bring a complaint. But it creates a conflict of interest where the company never loses. The arbitrator is paid by the Corp, so if the arbitrator rules against them, the Corp will just pick a different arbitrator.
No, they aren’t - arbitration is hugely biased in favor of the company, to the extent that the only way you can reasonably hope to win is by hiring a lawyer. But then to recover your money (a few grand maybe) you’re retaining a lawyer potentially for months, but because you’re not actually in court your chances of getting your legal fees.
This ignores that if you are a low wage employee subject to this kind of contract you are unlikely to be able to afford the initial retention costs.
My inclination would be to allow the arbiter to be selected by the employee. If companies really do believe arbitration is fair they should have no problem with that.
Arbitration is the result of a power imbalance between labor and employers, an attempt to subvert the ability to seek recourse in the justice system. It is wildly disingenuous to insinuate investment in legal firms is the motivator.
Uber and Chipotle are two examples of arbitration working as intend by employers.
It's not just employers. It's everything now. Just recently I went car shopping. The sale agreement requires arbitration. Cell phone contracts require it.
Come think of it, is there anything left that doesn't require arbitration?
About the only way out seems to be to have no business dealings with the company. If an airline drops a huge chunk of blue ice through my roof, and I haven't used that airline, then I guess I can still sue them. This isn't much comfort, because nearly every situation in which I might want to sue a company would involve doing business with the company and thus being subject to an arbitration agreement.
These aren't "working as intended" these are the companies being called out on their claim that it was about "efficiency".
In the both cases it's clear that they never intended to go into arbitration, and just assumed the amount of time required vs. the reward would not be worthwhile. The moment that the bluff was called they immediately tried to avoid the "efficient" option: Uber isn't paying the arbitration fees, chipotle tried to lawyer their way out of what They chose to force on their employees.
The Chipotle example is news because it is precisely not working as intended by the employer - it is preventing Chipotle from mounting a single deep pocketed defense for all of the cases together, and forcing Chipotle to address the claims one by one in small claims arbitration, which will may cost it more than just paying out.
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.