Arbitration is an agreement to resolve a dispute outside court through presentation to a neutral arbitrator. After evidence is presented the arbitrator reaches a decision and makes any award that a court can make.

Robert E. Meade, senior vice president of the American Arbitration Association in New York, sees advantages for both employer and employee. Like other experts in alternative dispute resolution, Meade believes in starting as early in the process as possible. If a dispute cannot be resolved by mediation, he recommends arbitration as the next step.

" The process is informal, confidential, relatively inexpensive, and filing is not technically difficult. You write the nature of the dispute and what remedy you are seeking. Employees have the right to representation by counsel if they wish," Meade says. Arbitrations are handled by experienced employment lawyers or former judges who are chosen by both sides.

No Backlog, Quick Decision

" There' s no backlog in arbitration. You' re ready to go," Meade says. The arbitrator discusses ground rules with the two parties in person or by conference call. " Discovery usually is not as extensive, but you are able to get everything you need to prove your case. You' re not going to have two years of discovery and depositions."

When the hearing is held " that arbitrator is waiting for your case. You' re not waiting in a courtroom hallway because the judge had too many other cases," he says. The hearing is orderly, but informal, with testimony and cross examination. " People are relatively free to really tell their story, unlike in a courtroom where you answer questions. The rules of evidence are relaxed."

The arbitrator has just 30 days to render a decision based on company policy and the law. Then, " it' s over. The only way to attack an award is if you can prove fraud or corruption."

The process is not only quicker and less expensive, " it' s far less damaging to the relationship" between the two parties, Meade says.

Court Cases Raise Questions

Various courts " are looking closely at agreements to arbitrate," says F. Peter Phillips, vice president of CPR Institute for Dispute Resolution in New York, which means that companies face a number of questions when designing arbitration procedures.

Among the questions: " Is the agreement to arbitrate going to happen prior to the dispute or after? Will it be mandatory or voluntary?" Phillips says. " It used to be easy. It was pre-dispute. The company would say everybody has to have mandatory binding arbitration and you waive your right to go to court. These days the court is saying ' wait a minute, did the employee make a full, knowing, advised decision to waive legal rights?' "

Last October the 9th Circuit Court of Appeals ruled that companies cannot mandate that complaints under Title VII of the Civil Rights Act of 1964 be arbitrated. " People stopped filing for a while but it' s back to the level before (the ruling). It' s just so expensive to take most cases to court," Meade says.

The 9th, 10th and District of Columbia Circuits have ruled that the company cannot require an employee to pay for the cost of the arbitration. Meade says generally employees only pay $50 or $100, with the company handling most of the cost.

And a Kentucky law prohibits pre-dispute agreements, but for most companies the law is superseded by the Interstate Commerce Act.

Employees are still free to file complaints with the Equal Employment Opportunity Commission, Meade notes. When the company receives notice of the filing it can write to the EEOC explaining that it has an arbitration procedure. Usually a dispute is successfully arbitrated before the EEOC takes up the case.

The EEOC still investigates patterns and practices of discrimination, Meade says. " A bad employer can' t hide bad practices" behind an arbitration procedure.

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