Arbitration Clauses: Protection for White Employers?

Arbitration Clauses:  Protection for White Employers?

I was recently reading through Fundamentals of Business Law:  Summarized Cases, 7th Edition by Roger LeRoy Miller and Gaylord A. Jentz.  The subject of arbitration in employment disputes came up.  Arbitration is where, rather than one party formally suing another in court, the two parties take their issue to a neutral and private, jointly agreed upon, 3rd party who hears both sides, and renders a legally binding (in most cases) decision. One option that employers have at their disposal is to include arbitration clauses in employment contracts.  For the most part, these are agreements that if either the employer or the employee have a non-criminal legal dispute arise between the two, they will have it settled by a private arbiter rather than a court of law.  So if an arbitration clause exists in a contract, yet one party still tries to sue in court, will the courts refuse to hear the case?  Obviously exceptions exist, such as if the clause appears to be too one sided (“unconscionable”), but by in large, the answer appears to be Yes.  But what about “discrimination” lawsuits, those legal magic bullets that seem to turn the Constitution and hundreds of years of accepted principles of jurisprudence on their heads. Wikipedia reports that “the Federal Arbitration Act requires that where the parties have agreed to arbitrate, they must do so in lieu of going to court, provided that the proceeding is fundamentally fair — that is, equivalent in fairness to the public courts.”  Fundamentals of Business Law seems to concur.  The book even lists a case, Circuit City Stores, Inc. v. Adams, where an employee with an arbitration clause tried to sue his employer for discrimination in state court, and the Supreme Court found that the arbitration clause was valid, and that the suit should not be heard.  One acknowledged exception to arbitration clauses is to contracts involving interstate transportation workers.  According to the book, “arbitration is normally simpler, speedier, and less costly than litigation.”  I checked the website of Grand Valley State University, which tracks some employment arbitration cases.  Of their non-union arbitration cases listed, dealing with the topic of various types of employment discrimination, the arbiters seemed to side overwhelmingly with the employers.  Although some arbiters found that the employer did not have just cause to terminate an employee, with the question of whether or not discrimination occurred, the results seemed to go something like 16 to 1 in favor of the employer.  I’ll admit that I don’t know how representative this sample is, but it doesn’t seem entirely implausible that it mirrors national results.  In contrast, when such suits are brought into court, depending on the race of the judge, a ratio of only about between 1 to 1  and 4 to 1 cases ended in favor of the employer.  So arbitration clauses seem to be generally enforceable, and are more likely to result in quicker, less expensive, more favorable outcomes for employers accused of discrimination.  My suggestion to white employers:  Obviously, consult a lawyer first…but if they see no problem with it, make all employees sign employment contracts, and include arbitration clauses in them that require all discrimination disputes to be brought before a private arbiter.  This seems like a fairly effective way to minimize exposure to the Reverend Al and his bunch, so at first I was surprised that not more employers choose to take this route.  Then I remembered…almost all hiring/employment considerations at large institutions fall under the control of the “human resources”-diversity-industrial complex these days.  The black woman in charge of HR at your company doesn’t want to minimize the organization’s exposure to legal liability.  She just wants to help wage her little piece of the race war.  Not including arbitration clauses in employment contracts is a good way of sandbagging her enemy’s defenses.  Not that her superiors really care.  Remember the first law of workplace diversity in Corporate America…given a choice between diversity (and accompanying bankruptcy) and efficiency, Corporate America will choose bankruptcy every time.

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