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October 05, 2004

When the Judge is Partisan

When you have a legal complaint against your employer, how would you feel if the judge also worked for your employer in other capacities?

That the situation faced by many employees who are forced into mandatory arbitration for their individual employment suits. Unions often have arbitration clauses, but they use arbitrators who are full-time and independent. This is often untrue with individual arbitration, where the employer picks the arbitrators used. (See the full BNA article below):

On the other hand, employment arbitrators, who handle disputes between employers and nonunion employees often are lawyers and others who also advocate for either employees or management. . . conflict-of-interest appearance problems are raised when arbitrators perform training for companies for which they arbitrate cases. . .the practice has some similarities to the problems of the defunct accounting firm Arthur Andersen, which audited corporations while also consulting for them.
Mandatory private arbitration is an evil that should be abolished. If an employer and an employee agree that a particular problem be submitted for mediation, more power to them, but an employee should always have the right to a jury trial if they want one. For too many employees, the supposed right to jury trial is disappearing into the maw of those mandatory arbitration agreements, often before arbitrators who are institutionally biased towards the employer.

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BNA LABOR REPORT No. 192
Tuesday, October 5, 2004 Page A-7

Arbitration Growth in Employment Arbitrations
Raising Ethical Questions, Problems

SACRAMENTO--Ethical questions are being raised as companies increase their use of employment arbitration, according to speakers at a Sept. 30 session of the Association for Conflict Resolution's annual meeting.
David Weinberg, a San Francisco area commissioner for the Federal Mediation and Conciliation Service, pointed to problems when an employment arbitrator also has other roles. Traditional labor contract arbitrators tend to be full-time neutrals, said Weinberg, who once administered arbitrations for the American Arbitration Association. On the other hand, employment arbitrators, who handle disputes between employers and nonunion employees often are lawyers and others who also advocate for either employees or management, he said.

Weinberg, noting that his views do not necessarily reflect those of the FMCS, said he believes that neutrals in the employment field should not be advocates.

Also, he said conflict-of-interest appearance problems are raised when arbitrators perform training for companies for which they arbitrate cases. "The system smells funny," he said. Weinberg said the practice has some similarities to the problems of the defunct accounting firm Arthur Andersen, which audited corporations while also consulting for them. There was an "appearance of a conflict of interest, if not a direct one," he said.

Fredric Dichter, a Wisconsin arbitrator, said the employment due process protocol developed by an American Bar Association committee in cooperation with the AAA and FMCS, sets forth guidelines and procedures for use in employer arbitration and mediation programs that ensure fairness.

The protocol mandates that the employee be allowed to have representation, although whether the employee pays for counsel costs and other costs is open to question. The protocol also requires that some form of discovery be allowed, Dichter said.

Dichter observed that "appearances can be everything." He said whenever he receives an appointment to an employment arbitration, the first thing he asks is what process the company used in developing its program.

He said he also tries to find out how he was picked. If only the employer picks the arbitrator, and the employee does not want that person, the arbitrator should withdraw, Dichter said.


American Arbitration Association Revising Rules

Eric Tuchmann, AAA general counsel, emphasized the importance of adhering to the protocol. He noted that employers generally want to do the right thing if the AAA finds that their program does not adhere to the protocol and AAA rules.
Tuchmann said that the AAA plans to revise its employment arbitration rules, including arbitrator disclosure requirements, which he predicted "will not lessen."

Tuchmann said California state disclosure rules require arbitrators to complete a seven-page form and disclose business relationships of family members and even family members of ex-spouses.

He noted that there is an upswing in cases where parties challenge arbitration awards on the grounds that the arbitrator did not make the proper disclosures throughout the nation. Tuchmann said challenges not only concern nondisclosure of purported financial relationships but also prior life experience, which he finds troubling.

For instance, he hypothesized, if arbitrators were discharged from jobs 10 or 20 years before on grounds that might suggest that they were victims of discrimination, do they have to disclose that or should they be disqualified, he asked.

Posted by Nathan at October 5, 2004 09:50 AM