As recent Supreme Court decisions have surveyed and expanded the landscape of arbitration and arbitration agreements, employers have placed greater focus on whether arbitration is actually the right fit for their company. Arbitration offers many benefits including privacy, confidentiality and avoidance of emotional jury awards to mention a few. Among the most cited drawbacks of arbitration are the cost of arbitration fees, the lack of summary disposition and the impossibly narrow scope of appeal. It is not uncommon for an employer to receive a statement from an arbitration provider that is in excess of $35,000 for the cost to administer and try an employment arbitration. See “Employment Arbitration: A Practical Assessment of Advantages and Disadvantages,” New York Law Journal (Nov. 27, 2017).
In addition, a growing number of employers now say that the absence of a mechanism in arbitration to incentivize reasonable settlement offers also gives them pause. If you practice in certain states, the state’s offer-of-judgment rules (akin to FRCP 68) explicitly apply to the arbitration setting. The rest of us are left to fashion a similar settlement apparatus through the arbitration agreement.
