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Phantom Benefits

Reconsidering Mandatory Employment Arbitration

William F. Harrah College of Hotel Administration University of Nevada, Las Vegaswilliam.werner{at}ccmail.nevada.edu

Christian E. Hardigree

christian.hardigree{at}ccmail.nevada.edu

Shannon Okada

In an effort to avoid the rising costs and risks of employment litigation, some companies in the United States have implemented employment contracts that require employees to submit any legal disputes with their employer to final and binding private arbitration. The assumption of such companies, as well as scholars and practitioners who have studied the matter, has been that a company should impose final and binding arbitration on its employees, if it may lawfully do so. An examination of that assumption indicates that mandatory employment arbitration is not necessarily the most advantageous method of employee dispute resolution. Indeed, despite what appears to be a rising popularity of mandatory employment arbitration, such a policy should not be viewed as a panacea for rising employment litigation risks and may not even be appropriate or helpful for many businesses.

Key Words: civil-rights complaints • mandatory arbitration • litigation and arbitration compared • alternative dispute resolution

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