The Chicago Employment Law Blog

U.S. High Court Backs Employment Arbitration

An arbitrator, rather than a judge, may decide whether or not an arbitration agreement is fair, according to a Chicago Tribune article explaining a recent U.S. Supreme Court Decision. The 5-4 decision, largely siding with business, was decided by the conservative majority (PDF).

Pre-employment contracts often stipulate that prospective employees agree to settle disputes via arbitration instead of through the courts. Similarly, the fine print in consumer contracts also usually compels the use of arbitration.

Critics say arbitration is much more expensive for employees, who must pay for the arbitrator (often a retired judge) and have limited options for appeals. Businesses, meanwhile, prefer the speed and the confidential nature of arbitration and say jury trials often are biased against corporations.

Illinois employment lawyers following this case likely are divided over the decision based on whether they represent workers or businesses.

The issue before the Supreme Court was whether an arbitrator could decide if his or her arbitration decision was enforceable. The alternative would be the authority of a judge. Justice Antonin Scalia, writing for the majority, said that the court should not decide if an arbitration clause in an employment contract is unconscionable.

This was not the first time forced arbitration has been challenged in court. Critics say prospective employees have little choice in the matter other than turning down a job offer.

Justice John Paul Stevens, writing a dissenting opinion, said the majority decision opens the door to abuse:

"I do not think an agreement to arbitrate can ever manifest a clear and unmistakable intent to arbitrate its own validity."

Karen Halverson Cross, a John Marshall Law School professor in Chicago, said the decision removed an important check on the arbitration system:

"If an agreement to arbitrate is unfair, the arbitrator shouldn't decide that question. There needs to be a basic level of court control of that process."

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