Wednesday, December 19, 2018

Judge offers insight on (and criticism of) employment arbitration

If you're interested in employment arbitration agreements, then this is the opinion for you! In Styczynski v. MarketSource Inc., Judge McHugh (E.D. Pa.) provided a great overview of the law regarding unconscionability (both procedural and substantive) for employment arbitration agreements.

I found the analysis very interesting and helpful. What's getting all of the attention, however, is a concluding section in which Judge McHugh summarizes substantial criticism of employment arbitration agreements. Some of the main points:

  • Roughly 20% of non-union employees have arbitration agreements (often imposed as contracts of adhesion);
  • Employees win less often (compared to court litigation);
  • Employees win less money when they do win;
  • The forum deters many employees from even pursuing claims (with some data suggesting that arbitration is a greater deterrent than litigation).
His argument relied heavily on research following the Supreme Court's decision in 2001 in Circuit City (holding that the Federal Arbitration Act (FAA) covers employment contracts). Ultimately, of course, it's up to the Supreme Court to reverse the precedent holding that the FAA makes employment arbitration agreements enforceable (or for Congress to amend the FAA itself).