Originally from Employment Arbitration - 2nd Edition

The Allocation of Costs in Employment Arbitration Agreements

Thomas E. Carbonneau

(i) The Ruling in Green Tree and Other Cases

In Cole v. Burns International Security Services, the court held that the payment of arbitral costs by the employer was instrumental to the enforceability of a contract for the arbitration of workplace disputes. Recent cases have adopted variegated dispositions on the question of mandatory employment arbitration and the impact of the allocation of the costs among the parties in the process.

In Shankle v. B-G Maintenance Management of Colorado, Inc., the U.S. Court of Appeals for the Tenth Circuit ruled that an arbitration agreement was unenforceable when it functioned as a condition of employment or of continued employment and required the employee to pay a part of the fees for arbitration. In the court’s view, the agreement, as written, in effect deprived the employee of any remedy by prohibiting recourse to the courts and by making arbitration too onerous to afford.

Plaintiff, Matthew Shankle, was a shift manager for defendant, B-G Maintenance Management of Colorado, Inc. B-G required Shankle to sign an arbitration agreement as a condition of continued employment. The agreement prohibited Shankle from having recourse to any judicial forum and required the resolution of disputes through binding arbitration. In addition, the agreement provided that Shankle would pay half of the arbitrator’s fee.