Employers are less inclined to use arbitration agreements to settle personnel disputes, according to a new report from the law firm Jackson Lewis. The trend can be attributed to employers reevaluating whether an arbitration program is worth it.
Jackson Lewis’s quarterly report on class action litigation found that while a good arbitration program can be useful, arbitration can also come with unpleasant side-effects like continuous arbitration and prolonged court cases, which end up hurting employers with fees for both the litigation and the arbitration.
The report looked at the state of arbitration agreements and arbitration programs, assessing some of the advantages and disadvantages of such programs for employers.
Employers are finding that arbitration agreements are not always the panacea they expected. The potential of “death by a thousand arbitrations,” as well as the continued uncertainty that can come from trying to arbitrate judgments can offset the benefits that come with avoiding the unpredictability of a jury trial and creating a less litigious culture within the business.
Ultimately, the report advises, “In deciding whether to adopt (or continue) an arbitration program, employers must evaluate their unique business risks, as well as the legal climate in which they operate.
“Rather than abandon arbitration altogether,” the report states, “employers should explore redrafting arbitration agreements to better meet their needs or selectively implementing arbitration.”
