Arbitration occurs when a private tribunal, rather than a court, adjudicates a particular issue. Usually, the rules in arbitration are more relaxed than they are in civil litigation, but different tribunals or arbitration service providers have different procedures that can be very close to or very different from court procedures. Sometimes corporate employers force workers to agree to arbitrate their disputes based on a clause in their employment agreement. A worker is then forced to agree to arbitrate any employment issue if they want to be employed by the employer.
The judicial system, and in particular the United States Supreme Court, has enabled corporations to force their employees into arbitration to adjudicate all types of legal violations, including those related to employment discrimination and wage and hour disputes. This means that corporations have the power to write rules and design the procedures that apply to them in case they discriminate against their employees or fail to pay them their wages properly under law. Forced arbitration, as ratified by the judiciary, denies workers their right to bring a lawsuit against an employer for serious legal violations and have the dispute judged by a jury.
This is important because employees win less often in arbitration than in court. When they do win, they receive lower damages awards. Some arbitration clauses even require the losing party to pay the arbitration fees, including their employer’s attorneys’ fees. This deters workers from bringing their claims and exercising their rights.