Court Decision Weakens Employee Rights

On March 21, the Supreme Court decided in Circuit City Stores vs. Adams that employers can require employees to sign employment contracts agreeing that all employment disputes will be resolved by binding arbitration.

Posted on April 3, 2001 at 12:00 p.m.

STORY:

On March 21, the Supreme Court decided in Circuit City Stores vs. Adams that employers can require employees to sign employment contracts agreeing that all employment disputes will be resolved by binding arbitration. Alternative dispute resolution procedures are often preferable to lawsuits in that they can be cheaper, faster and can help solve a problem closer to its source. But according to Judith King, associate professor in the UAB Center for Labor Education and Research, “The body of employment law built up over the past 40 years could be weakened considerably by this decision.”

WHO:
Judith L. King, Associate Professor and Acting Director of Center for Labor Education and Research (CLEAR). Established in 1972, CLEAR provides labor education, workplace safety training and communication skills training for more than 3,500 workers each year.

WHAT:
“Unions and companies have negotiated binding arbitration provisions for years, yet there are significant differences between labor arbitration and what the Supreme Court ratifies in this decision,” King says.
  • Will employers bear the total cost of arbitration? Unions arbitrate on behalf of their members and they bear half of the cost of those proceedings. In non-union employment dispute cases, who will pay the costs of the arbitration hearing?

  • Who will argue on behalf of the typical non-union employee? Union advocates are trained to prepare and argue labor arbitration cases. But, the non-union individual will be at a tremendous disadvantage going up against a company lawyer. The employee may want to find an attorney, although that could prove difficult. Without the possibility of punitive and compensatory damages, there is little financial incentive for an attorney to take the case.

  • Who will select the arbitrator? Unions have a hand in selecting arbitrators. The company and the union alternate strikes on a list of potential arbitrators, helping to insure that arbitrators with an obvious bias toward one side or the other are eliminated. Will an individual employee have that same right and, even if they do, will they know enough about the listed arbitrators to make a decision?

  • Will employees lose all statutory rights? Union members don’t waive their statutory rights when they go to arbitration. But this decision forces employees to sacrifice their statutory rights by making arbitration mandatory.

  • Will damage awards be limited? Under some statutes, courts can award compensatory and punitive damages in employment disputes. Arbitrators are generally limited to “make-whole” remedies such as back pay and reinstatement.