What is Arbitration?
Arbitration is the most common ADR process used in the workplace.
Arbitration involves the submission of a dispute to an independent, third party neutral who is chosen by both parties to resolve a dispute, and who renders a final binding decision.

How does it work?
Step one: Pre-arbitration Process
Usually the dispute goes through "grievance steps" in an attempt to settle the dispute before submitting it to arbitration. These steps include meetings or informal hearings between the employee and progressively higher levels of management.

Step two: Decide which issues are covered
Workplace conflicts, violations of company policy, and statutory employment claims may be covered; everyday "gripes" should be excluded or resolved at the earliest grievance steps.

Step three: Determine who is covered
Coverage may not include all employee groups and may or may not include supervisors of managers.

Step four: Set parameters for discovery
In arbitration there is minimal right to discovery; less than in litigation, but enough so that both sides have an opportunity to obtain the information necessary to present their case.

Step five: Select an arbitrator
Qualified neutral arbitrators may be found through providers such as the American Arbitration Association (AAA) or the Federal Mediation and Conciliation Services (FMCS). Both employees and the company should have access to information about available arbitrators and should jointly make the selection. If they disagree, they can use an alternate strike method as a means of selection.

Step six: Arbitration Hearing
During the arbitration hearing, each side presents evidence through witness testimony and documents that can be recorded stenographically. Strict rules of evidence usually are not applied, but the hearing itself is held in an orderly fashion with an opportunity for cross-examination, rebuttal testimony, opening and closing arguments, written briefs, and party representatives (who may or may not be attorneys).

Step seven: Arbitration Decision
The arbitration decision provides a remedy and explains the reasons for the arbitrator's conclusions. The decision can be appealed on narrow grounds only. Legal error, rather than factual error, usually constitutes the basis for appeal.

Advantages:

• Arbitration is generally perceived as a fair and unbiased system.
• Arbitration resolves a dispute with finality and does not depend on the parties to voluntarily agree.
• Courts generally defer to the arbitration decision.

Disadvantages:

• Arbitration remains a relatively formal process (though less formal than litigation).
• Arbitration remains a relatively formal process (though less formal than litigation)
• Arbitration may emphasize the adversarial process rather than reconciliation.
• Will Courts defer to the Company's Arbitration Program?

Employers do not want employees taking "two bites of the apple": taking advantage of an arbitration process and then, if they lose, filing a lawsuit in court. Thus, it is generally beneficial to ensure that the arbitration result is final and binding and is the exclusive forum. Generally, company-mandated arbitration of employment disputes is enforceable in court over employment disputes as long as the company's program comports with essential legal requirements for fair process. Courts will defer to arbitration that includes the following characteristics:

Any waiver of the right to file a charge or a lawsuit must be knowing and voluntary. Employees must be given a copy of the dispute resolution policy and should sign a form acknowledging their receipt and understanding of the implications of the policy.

The policy must be easy to understand. The employee should understand from reading the policy exactly how to take advantage of the dispute resolution policy and the available options.

The policy must be procedurally fair to the employee. Employees should have the right to representation by counsel at arbitration; the costs of arbitration should be borne by the employer, and remedies available to the employee should mirror those available under the relevant statutes.
Two Exceptions to Court Acceptance of Mandatory Programs:

In the union setting, the Supreme Court has held that an arbitration agreement contained in a collective bargaining agreement does not limit an employee's right to bring lawsuit in court. Recently, the Court has indicated it may change directions, but has not yet done so.

The Ninth Circuit (9 western states including Guam), despite long-standing precedent in other circuits and the Supreme Court, holds that an agreement to arbitrate does not bind the employee to arbitrating his/her Title VII claims as an exclusive remedy.