Arbitration: A Positive Employment Tool and Potential Antidote to Class Actions

Abstract

More than two years have elapsed since employers let out a sigh of relief when the Supreme Court overturned the 9th Circuit decision in Wal-Mart v. Dukes and decertified the class of plaintiffs suing Wal-Mart, the nation’s largest employer, for sex discrimination.1 The class consisted of approximately 1.5 million of the retailer’s former and current female employees.2 While the details of the lower and Supreme Court decisions are beyond the scope of this paper, the lesson for many employers was the fear that class actions, regardless of merit, could put an entire company at risk. While the obvious response, “don’t violate the law,” should seemingly resolve that fear, the fact is that many employment lawsuits, such as wage and hour or discrimination cases, are often difficult to defend. This may occur because: (1) the law is unclear; (2) there are shades of gray in employment decisions, (3) it is difficult to ensure compliance in large multistate or multi-national corporations, or (4) sometimes companies face “bad facts” even when they did not violate the law. Although defending the allegations of one employee or even a group is expensive, most employers are able to do this. Defending a class action, however, often requires resources beyond what many employers can marshal. In this paper, we propose a way to avoid such costly litigation: arbitration.