Why Is Labor Arbitration "Better" Than Other Arbitration?

One important element sets labor arbitration apart

Earlier this week, I read Reality TV or Court TV? Lawsuits Test Limits of Outrageous Behavior, which is about lawsuits certain reality TV stars have brought against their broadcasters, including Bravo and Netflix. The lawsuits themselves are almost as juicy as the shows they arise from, but one particular line in the article jumped out at me.

The industry has long shielded itself from litigation with tightly written contracts laden with nondisclosure agreements and provisions requiring closed-door arbitration proceedings to settle any disputes.

As you can see from the way that this sentence is written, “closed-door arbitration proceedings” are understood as a way that industries can shield themselves from litigation. Arbitration is an alternative to litigation but why is it considered a “shield” by industries who prefer it?

Industries prefer arbitration because the process arises from a legal document that they’ve written, rather than one that is passed by a legislature. In non-labor arbitration, such as the contracts that the Real Housewives sign, the individual has very little input on the terms of that agreement. Arbitration clauses tend to be non-negotiable components of a larger agreement and there’s a “deal or no deal” factor that inhibits negotiation when it’s an individual against a company.

What sets labor arbitration apart is that labor arbitration arises in the context of a collectively bargained agreement, where both parties - the employer and the union - have negotiating power about the terms of that agreement. While it’s not a perfectly equal relationship, the union does have economic and legal tools at its disposal to ensure a higher degree of fairness and due process in their arbitration procedure than the fame-seeking Housewife does.

In other ways, labor and non-labor arbitration are similar. Arbitration offers a level of privacy that is not necessarily available in court, where members of the public can enter courtrooms and access court records. Arbitration may be less costly and time-consuming than court. The parties get to select their neutral decision maker, rather than having the court appoint a judge.

This is another area where the industry insider might have an advantage over the individual in non-labor arbitration. Industry experts and their lawyers may be more knowledgeable about who the arbitrators are and how they’ve ruled in the past. In labor arbitration, the union usually has access to the same information, meaning that the selection is well-informed on both sides.

There are many employment arbitrators and other non-labor arbitrators who take very seriously their responsibility to ensure a full and fair proceeding for claimants who might prefer to be in court. In some cases, parties will do better in arbitration than they might have in court. As you can tell from the article I cited, however, many plaintiffs’ attorneys have concerns about whether arbitration offers the same protections that the law provides. That is less of a concern in labor arbitration, where unions are familiar with the legal protections for workers and feel confident that they can select arbitrators who better understand their workplace than a judge might.