Navigating the Pros and Cons of Employment Arbitration By Jason Resnick, Senior Vice President and General Counsel Employment arbitration is an alternative dispute resolution mechanism where employees agree to resolve their disputes with their employer outside of a court. The use of employment arbitration agreements has become increasingly common, and most attorneys (including this author) advise employer clients that it’s generally better to have them than not. However, despite the oft-promoted advantages, there are also some practical disadvantages of employment arbitration that must be considered. Arbitration of PAGA Claims The question of arbitrability of representative actions under California’s Private Attorneys General

and money. In single-plaintiff cases, arbitration is generally less expensive than a jury trial. Extended jury trials can be costly in terms of attorney time spent preparing for trial and participating in pre-trial matters before the court. Arbitrations are typically resolved much more quickly than similar cases navigating the court system. Shortening the time to get to a merits hearing versus a jury trial can save employers substantial legal fees. Employment arbitration agreements typically include class action waivers. Class action lawsuits can be extremely expensive for employers and can result in significant damages being awarded to plaintiffs. A class action waiver can effectively prevent this type of litigation from occurring. Instead, employees would need to pursue their claims individually, reducing the settlement value of the case. Arbitrations generally provide for more predictable outcomes. In a courtroom, a jury may be swayed by emotions, prejudices, or other factors that can influence the outcome of a case. On the other hand, arbitrators, many of whom are retired judges, are trained to make impartial decisions based solely on the facts of the case. This can lead to more consistent and predictable outcomes for both employers and employees. The lack of a potential

Act (PAGA) remains very much in flux. The California Supreme Court has granted review in Adolph v. Uber Technologies, Inc. , on the question as to whether an aggrieved employee who has been compelled to arbitrate claims under PAGA that are “premised on Labor Code violations actually sustained by” the aggrieved employee maintains standing to pursue “PAGA claims arising out of events involving other employees” in court or in any other forum the parties agree is suitable. The U.S. Supreme Court left the door open for the legislature or the California Supreme Court to settle this question of standing. The California Supreme Court is expected to render a decision on that issue by early August. With the caveat that the value of arbitration agreements in PAGA collective-action claims remains an open question, let’s explore the practical advantages and disadvantages of employment arbitration. Advantages of Employment Arbitration One significant benefit for arbitrating workplace claims is that it can save significant amounts of time


MAY | JUNE 2023

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