BUSI 561 Week 5 DB Forum 2: Thread Example

Discussion Board Forum 2: Alternative Dispute Resolution and Tort Law

BUSI 561 Legal Issues in Business, Discussion Board Forum 2: Thread

Thread by [Student Name]

The forum prompt and the employer in the thread are composites standing in for the course's own prompt; the research, the cases and the Scripture cited are real, and the requirements follow Liberty's public course guide for BUSI 561.

Thread

A composite regional health system with 6,000 employees is considering a change to its hiring paperwork: every new employee would sign an agreement to resolve any legal claim against the employer, from wage disputes to discrimination, through binding arbitration rather than in court. Its lawyers point out that lawsuits are slow and expensive and that juries in employment cases sometimes return large verdicts. Its human resources director worries that employees will see the agreement as a way to deny them their day in court. My position is that arbitration can serve both the employer and its employees, but only if the program is designed to be fair, and the evidence shows why design matters.

What Arbitration Is and Why It Is Enforced

Kubasek et al. (2016) distinguish three main forms of alternative dispute resolution. In negotiation, the parties resolve the dispute themselves. In mediation, a neutral third party helps them reach their own agreement but cannot impose one. In arbitration, a neutral arbitrator hears evidence and issues a decision that, when arbitration is binding, courts will enforce with very limited review. The Federal Arbitration Act, as the Supreme Court has interpreted it, requires courts to enforce arbitration agreements in employment contracts, including agreements waiving class actions. An employer that adopts such an agreement can therefore move nearly all employee claims out of court.

Stipanowich (2004), reviewing the growth of ADR over the preceding quarter century, found clear evidence that some court-connected ADR programs save time and money, that businesses had increasingly turned to mediation because they saw real benefits in it, and that the effects of ADR depended heavily on how programs were structured. His point about structure is the key to the employment question.

What the Evidence Shows About Outcomes

Colvin (2011) studied 3,945 employment arbitrations administered by the American Arbitration Association under employer-promulgated procedures from 2003 to 2007. Employees won 21.4 percent of the cases decided after a hearing, a rate lower than reported win rates in employment trials. When employees won, the median award was $36,500 and the mean $109,858, both substantially lower than awards reported in litigation. On the other side of the ledger, arbitration was much faster: cases decided after a hearing took a little under a year on average, far less than litigation typically requires. Employers paid nearly all of the arbitration fees.

Lower win rates and awards do not by themselves prove unfairness, since the cases that reach arbitration may differ from those that reach trial. But Colvin and Gough (2015), analyzing 2,802 awards over 11 years, found something harder to explain away. Employers involved in many arbitrations won more often and paid lower damages, and employers who appeared repeatedly before the same arbitrator did better still than employers appearing before an arbitrator for the first time. Employees who represented themselves fared worst of all. The repeat-player effect suggests that a process in which one side returns again and again, and helps choose and pay the decision maker, can tilt outcomes even when every individual arbitrator acts in good faith.

The Employer's Strongest Arguments

The case for arbitration deserves a fair hearing. Litigation exposes employers to the unpredictability of jury awards, including punitive damages, the tort remedy the textbook describes as intended to punish especially reprehensible conduct and deter others. A single large verdict can cost a hospital system more than years of settlements. Litigation is also public, which can damage reputations even when claims fail, and it consumes management time for years. For many employees, especially those with modest wage claims that no lawyer would take on contingency, arbitration may be the only realistic forum, and the finding by Colvin (2011) that employers paid nearly all fees means the employee's cost of bringing a claim can be low. The Supreme Court's decision in Epic Systems Corp. v. Lewis (2018), upholding agreements that waive class and collective actions, adds a further reason employers favor arbitration: it limits exposure to large group claims. That advantage, however, is also the strongest objection, because many small claims are worth pursuing only as a group.

A Biblical Worldview on Resolving Disputes

Scripture values the speed and peace that arbitration offers. Jesus taught, "Come to terms quickly with your accuser while you are going with him to court, lest your accuser hand you over to the judge, and the judge to the guard, and you be put in prison" (English Standard Version Bible, 2001/2016, Matthew 5:25). The teaching commends resolving conflict early, before it hardens into an adversarial contest whose costs fall on both sides. An employer that offers a faster, cheaper path to resolution can honor that teaching, and so can an employee who uses it in good faith.

Scripture also sets a standard for any process that judges between people. The law commanded, "You shall do no injustice in court. You shall not be partial to the poor or defer to the great, but in righteousness shall you judge your neighbor" (Leviticus 19:15). The phrase "defer to the great" describes the repeat-player problem with uncomfortable precision. A dispute process that systematically favors the party that pays the decision maker and returns most often is a process that defers to the great, whatever its intentions. For a Christian employer, the question is not only whether arbitration is legal but whether the process it creates is impartial.

A Program a Christian Employer Could Defend

The health system can keep arbitration's benefits while addressing its weaknesses. I would recommend six features. First, offer mediation before arbitration, since a mediated settlement is the early resolution Matthew 5:25 commends. Second, pay all arbitration costs beyond a modest filing fee, as most employers in Colvin's study did. Third, let employees choose among arbitrators from a neutral provider's roster and rotate arbitrators so that no single arbitrator hears many of the company's cases. Fourth, allow the same remedies a court could award, without caps. Fifth, provide reasonable discovery, so employees can obtain the documents they need. Sixth, consider making arbitration voluntary, or allowing employees to opt out within 30 days, which tests whether employees see the program as fair. None of these features is costly compared with a single jury trial. A program built this way answers the human resources director's concern and gives the employer what it actually needs: prompt, private resolution of disputes, achieved through a process both sides can trust.

References

Colvin, A. J. S. (2011). An empirical study of employment arbitration: Case outcomes and processes. Journal of Empirical Legal Studies, 8(1), 1-23. https://doi.org/10.1111/j.1740-1461.2010.01200.x

Colvin, A. J. S., & Gough, M. D. (2015). Individual employment rights arbitration in the United States: Actors and outcomes. ILR Review, 68(5), 1019-1042. https://doi.org/10.1177/0019793915591984

English Standard Version Bible. (2016). Crossway. (Original work published 2001)

Epic Systems Corp. v. Lewis, 584 U.S. 497 (2018).

Kubasek, N. K., Browne, M. N., Herron, D. J., Dhooge, L. J., & Barkacs, L. L. (2016). Dynamic business law (Biblical worldview ed.). McGraw-Hill Education.

Stipanowich, T. J. (2004). ADR and the "vanishing trial": The growth and impact of "alternative dispute resolution." Journal of Empirical Legal Studies, 1(3), 843-912. https://doi.org/10.1111/j.1740-1461.2004.00025.x