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Bruce Nye

I blog (at Calbizlit) on a variety of litigation issues affecting businesses in California, including employment issues. I agree with your assessment that employers make a mistake to blindly pursue mandatory arbitration in employment matters, for two reasons: first, in non-punitive damages matters, arbitrators, particularly retired judges, can outstrip juries when it comes to generous awards. Judges have just seen too much. But more importantly, I can tell you as an employer, as well a lawyer, that trying to superimpose binding arbitration on an existing employment relationship casts a real pall over the employer / employee relationship.

Having said that, however, there are two features about binding arbitration, at least in California, that can't be discounted. First, California has a reasonably well thought out mechanism for having the trial courts appoint arbitrators. It appears at California Code of Civil Procedure section 1281.6. On motion of either side, the trial court names five prospective arbitrators. The parties have five days to agree on one of them. If they don't, the court selects one from the list of five. This eliminates the "vendor interest" problem you refer to in your posting.
But there's a more significant reason California employers want to force binding arbitration: it eliminates the high end for punitive damages in discrimination, retaliation and harassment cases. Arbitrators are simply less likely to render large punitive damages awards. And this, of course, is why we resist them when we represent employees.

Bruce Nye

Greg Taylor

Building on Bruce's point, why not use a voluntary arbitration provision, allowing either side to elect arbitration, rather than a mandatory provision? Employees rarely elect arbitration, so employers keep the option, which may be helpful in certain
circumstances such as class actions or where punitives are in play.

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