Devoted to Corporate Attorneys, Corporate Lawyers, and Corporate Counsel

The following is not meant to be legal advice.

In California, for arbitration agreements to be enforceable in employment, the employer has to pay for the arbitration.  Because arbitration decisions are binding usually, the employer takes it just as serious as litigation.  Arbitration is just as expensive as litigation because the employer pays the employee’s costs, and the attorneys fees are the same, plus there is the cost of arbitrators. 

The employer may choose arbitration because it does not want to leave decisions to the jury who may be emotional, bias.  This may not lead to a decision according to the law.  The jury may not be a peer group of the employer, such as upper managers.  The arbitrator has a different background from the jury.  He/she may know the law.  He/she may be a retired judge or lawyer.  He/she usually does not award punitive damages as in trials.

Punitive damages are suppose to have the same relation to the actual damages, but sometimes a jury may look to see the profits of a company to calculate how many damages it takes to punish the company. 

If there is arbitration, there is less media coverage.  For instance, a manager may not want media coverage on a defamation suit involving a reference check.  If the manager got into a defamation suit because he/she gave out personal information on a former employee, he/she may want the case to quietly be resolved through arbitration.