The Profoundly Negative Impact of Arbitration on Workers’ Rights

Lawyers who represent employers regularly argue that there is no real difference between arbitration and jury trials.  They contend that arbitration does not affect the outcomes of cases.  And, it is “cheap and quick,” and the employer pays for the arbitrator.  So what are workers complaining about, anyway?Gear-and-Gavel_dark-blue

But as more and more employment cases are decided in arbitration, there are more and more data confirming the profoundly negative impact that arbitrations have on workers’ rights.  There are usually two main questions in litigation:  who wins, and what do they get.  The answer to each of these questions swings dramatically in favor of employers when employment disputes are forced into arbitration.

In other words, when workers are forced to arbitrate their claims, their likelihood of winning plummets.  In the event that workers win at arbitration, they are awarded much less money than the workers who win in state and federal court.

On February 27, 2014, Professor Alexander J.S. Colvin and Ph.D. Candidate Mark Gough (both from Cornell University’s School of Industrial and Labor Relations) gave an outstanding talk at Berkeley Law exploring the impact of arbitration on the outcome of employment litigation.  The statistics they discussed include the following:

1.  Professor Colvin’s research found “gross differences in arbitral and litigation outcomes.”  Overall, employees had a 57% win rate in state court trials, a 36% win rate in federal court trials, and a 21.4% win rate in AAA arbitration awards.  The average damages in state court were $328,000; in federal court $143,500; and in AAA arbitration $23,500.

2.  Mark Gough concluded that “Arbitration has a significant independent effect on employee outcomes:

  • Arbitration decreases the odds of an employee win by 59%
  • Award amounts decrease by 35% in arbitration”

These findings are astonishing, but not surprising.  This is exactly why employers are pushing so hard to get employment disputes decided in arbitration.  This is exactly why those who fight for workers’ rights must continue to resist this trend.

Another powerful statistic that Dr. Colvin shared was that 77% of employers were represented in arbitrations by employment law specialists, while only 55% of employees were represented in arbitrations by employment law specialists.  Similarly, 55% of employers were represented by law firms handling multiple abitration cases that year. Only 11% of employees were represented by law firms handling multiple arbitration cases that year.  This scenario creates a perfect storm for employers:  arbitrations are more difficult forums for workers, and workers are represented by lawyers who are not familiar with the arbitration process.

The attorneys at Hunter Pyle Law are committed to fighting for workers’ rights, no matter what the forum.  If you have a question about arbitration, please do not hesitate to contact us at 510.444.4400 or

***The quotations from Professor Colvin and Mr. Gough are used here with permission.  Their talk was part of a day-long conference regarding called Forced Arbitration In The Workplace: A Symposium and organized by The Berkeley Journal of Employment and Labor Law (BJELL) and The Employee Rights Advocacy Institute For Law & Policy.