Apr 29, 2008

Employment Arbitration: Who's Winning?

There was an interesting article by Marcia Coyle in The National Law Journal last week, reporting on a study of court rulings on employment arbitration awards. The study found that federal courts upheld arbitration awards at roughly the same rate, whether the employee or the employer won the underlying arbitration. State courts were a different story, however: State appellate courts confirmed employee arbitration victories only 56.4% of the time, but confirmed 86.7% of employer victories. Previous studies have looked at how employees fare in arbitration: how often they win, how the costs and fees compare to those paid in litigation, and how large the awards are. The National Workrights Institute has compiled some of this research here. The data they looked at partially contradict the anecdotal evidence -- and gut feeling -- of many lawyers that employees tend to do better in front of a jury than before an arbitrator or panel of arbitrators. Although the figures in the research they looked at vary, they appear to indicate that employees may win more often in arbitration than in litigation, and that the median arbitration award is comparable to the median award in court. That isn't the whole story, however: The mean award to employees was much higher in litigation than in arbitration. (In case you missed that day, the median is the midpoint of a range of numbers, which means there are an equal number of awards above and below the median; the mean is the average award.) The higher mean for employees in litigation suggests that employees do better in court in the big money cases. However, the study also points out that, because litigation costs more than arbitration, employees who go to court may actually have better cases -- and that the ultimate amount the employee gets is often quite a bit less than the award.

To learn more about the basics of arbitration (what it is, when it arises, and how the process works), see Nolo's article Arbitration Basics.

Lisa Guerin