Originally from Dispute Resolution Journal

The lawfulness of mandatory predispute arbitration clauses for statutory employment disputes continues to fire the public debate between advocates and critics. Public opinion on the subject is still largely divided into two camps: those who believe that mandatory arbitration gives employees a realistic chance to pursue their claims and those who think that the system is inherently unfair. Cristina Fahrbach’s article traces the roots of this ongoing debate by discussing the relevant case law. From Gardner to Circuit City, numerous questions remain unanswered on such issues as the extent of judicial review, allocation of costs, and the limitations on discovery and damages.

A subject of much recent debate is the lawfulness of mandatory predispute arbitration clauses for statutory employment disputes. There must be a balance between a strong federal policy putting arbitration agreements on equal footing with any other contract and the protection of employees’ statutory rights.

Is the arbitral forum sufficient for protecting such statutory rights? Are employees being unlawfully forced to accept unconscionable agreements as a condition of employment? If such agreements are lawful, procedural safeguards must be taken to ensure the fairness of such hearings.

This article will consider the historical case law and circuit split relative to the lawfulness of such agreements and under what circumstances they have been upheld/set aside, recent Supreme Court cases, and the role of the Federal Arbitration Act in governing such agreements. Then it will consider the position of various “players” involved in this debate, including the NYSE and NASD, the EEOC’s role and position, as well as the Due Process Protocol. It will examine the potential procedural pitfalls and conflicting views on what are “fair” conditions under which these agreements may be enforced. It will also discuss concerns in light of the recent Supreme Court decision in Circuit City v. Adams, 2001 U.S. Lexis 2459.