Document Type


Publication Date



The major developments in employer-employee arbitration currently do not involve labor arbitration, that is, arbitration between employers and unions. The focus is on employment arbitration, arbitration between employers and individual employees. Beginning around 1980, nearly all the states judicially modified the standard American doctrine of employment-at-will whereby, absent a statutory or contractual prohibition, an employer could fire an employee "for good cause, for no cause, or even for cause morally wrong." Under the new regime, grounded in expansive contract and public policy theories, wrongfully discharged employees often reaped bonanzas in court suits, with California jury awards averaging around $425,000." Many employers responded by requiring employees to agree, as a condition for getting or keeping a job, that all employment disputes, including statutory claims, would be resolved through arbitration systems established by the employers rather than through suits in federal or state court. The U.S. Supreme Court upheld such mandatory arbitration in the much-debated Gilmer case in 1991. In its lead story on the first page of the Sunday, November 1, 2015 edition, the New York Times opened a three-part series with the provocative headline, "Arbitration Everywhere, Stacking Deck of Justice." The subhead summed it up, "Vast Trend Locks Americans Out of Court-Rulings Greatly Favor Business." The article went on to say: "[b]y inserting individual arbitration clauses into a soaring number of consumer and employment contracts, companies.. .devised a way to circumvent the courts and bar people from joining together in class-action lawsuits, realistically the only tool citizens have to fight illegal or deceitful business practices." All three Times articles quite appropriately cite numerous examples of abuses in the arbitration system. But the casual reader will have heard nothing about labor arbitration, where relatively well-matched employers and unions have negotiated a dispute-resolution system that has stood the test of time for its fairness, speed, and economy. More important for our purposes, the Times articles make no effort to point out certain advantages of even mandatory arbitration for employees and consumers. The articles thus fail dismally to provide a balanced picture of a complex subject. A more tempered overview will be the aim of the remainder of this paper. Is labor and employment arbitration indeed confronting a mid-life crisis today, or is it actually possible that such arbitration has the opportunity for a new "golden age"?