Mandatory arbitration holds few benefits for the employee. In the labor union context, it is helpful. The union and employer can pick the arbitrator they want. Both union and employer have knowledge of the different arbitrators and their particular biases. So, both sides can make an informed selection when they choose arbitrators. But, that does not work in the non-union context. Because in the normal at-will situation, the employee may go to arbitration only once in his/her life. She will have no knowledge of the different arbitrators. Instead, the employer will go to arbitration far more often and will have more knwowledge of the different arbitrators.
And, the cost is huge. One typical case: the employee was required to pay half the arbitrator’s fee (usually about $250/hr with a minimum of $2000/day), filing fee of $500, case filing fee of $1000, additional filing fee of $2750, $150 daily hearing fee. These are huge fees for someone who may have ben terminated.
Then, if you lose, you may have to pay the other side’s legal fees – $207,000 in one case. In another case, the arbitrator derived half of his annual income from the employer.
One study found that employees won 21% of the time in mandatory arbitration while winning 56% in California state courts. I know there are occasional significant wins for employees, but generally, employees do worse in arbitration than they do in traditional courts. The cost alone makes it virtually impossible for any employee to pursue.
And, since the employers do more arbitrations, the arbitratraors will favor them. The arbitrator gets work only if they get picked by one side or the other. Over time, the arbitrator will favor the side that hires him/her more often.
The reliance on arbitration needs to change. It is harming a great many employees. Support the Arbitration Fairness Act now pending in the Senate.