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Is Arbitration Actually Better for Individual Employees?

By George Khoury, Esq. on October 25, 2018 | Last updated on March 21, 2019

For some individuals, arbitration might actually be a better option than litigation. And as such, those arbitration clauses that are generally designed to make pursuing legal action more burdensome could actually backfire for employers.

In the employment context, in particular, an employee might be better served by pursuing a legal complaint via arbitration than a lawsuit due to the stigma of suing an employer and the fact that arbitration will keep the matter confidential. The potential cost saving benefits of arbitration over litigation also quickly dissipate when certain states, like California, require employers to bear the costs of arbitration. And while arbitration is generally disfavored, it can also have perks for certain employees.

It Sure Isn't Court

While arbitration is certainly a risky process due to the fact that there is only a single fact finder that has practically no accountability to anyone, so is any court proceeding, especially jury trials.

However, going to court on certain types of cases has plenty of other associated risks. For employees, the big risk is that filing a case in court means having their name associated with a lawsuit against an employer out there in the "public record," and if the case gets press, then a Google search might be all that a future employer needs to do to find out about the lawsuit. Mitigating reputational harm for plaintiffs is important and difficult.

Despite what we all want to think, the truth is that employers don't want to hire individuals that have sued prior employers. A private arbitration keeps any information about a claim against a former employer confidential, and means an employee who arbitrates will be much more employable, and thus much more able to keep fighting their claim.

Privacy Matters

Additionally, privacy can be rather important for individuals who don't want their private affairs aired to the whole world. Despite the #MeToo movement and how supportive the world is becoming for the victims of bad actors, the fact is that many victims of sexist, racist, or bigoted bosses feel shame and embarrassment, and might not want the whole world to know that part of their story.

Or it could actually be the other way around, where the employee may hold unpopular views that might be better suited for a private arbitration rather than a public trial.

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