Arbitration and the Law
Arbitration decisions are final and binding, and courts rarely overturn such verdicts unless the affected party proves the arbitrator did not apply the principles of justice when disposing the case. Very often, arbitration agreements require both the employer and employer to waive their right to sue in court. Any party may, however, approach the court to enforce the arbitrator’s award.
The US Supreme Court endorsed binding arbitration of employment claims, including claims involving discrimination in the landmark Gilmer v. Interstate/Johnson Lane, 500 U.S. 20 (1991) case. The Civil Rights Act of 1991 also recommended arbitration as a preferred means to solve employee disputes. The Stores, Inc. v. Adams, 532 U.S. 105 (2001) applied arbitration based on the provisions of the Federal Arbitration Act as a mandatory requirement when most employee contracts contain this provision.
Employers implementing an arbitration policy in the workforce need to provide a clear notice of the same to employees, highlighting the fact they would forfeit their right to sue in court, inform them of their right to an attorney, and the provisions for selecting an arbitrator mutually.
Dispute resolution is a basic Human Resource activity. Organizations that take the initiative to address causes for disputes promptly enjoy a favorable industrial relations climate, allowing them to focus their energy on positive and productive activities.