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Fairer, Faster, Better: An Empirical Assessment of Employment Arbitration

May 2019  |  Nam D. Pham, Ph.D. and Mary Donovan

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Empirical evidence shows that employment arbitration is an effective process for resolving employment disputes. While litigation is a long and often burdensome process with many rules and requirements, arbitration is simpler and more flexible. We used a robust dataset of over 100,000 cases from the largest employment arbitration providers and a national litigation database to analyze and compare arbitration and litigation in recent years. Analysis of that evidence shows that arbitration yields better results for employee-plaintiffs. Arbitration is faster than litigation for employee-plaintiffs to obtain an award. Importantly, employee-plaintiffs fare better in arbitration, winning 32% compared to 11% of awarded cases for litigation. Moreover, monetary awards for employee-plaintiffs in arbitration were 93% higher than litigation on average. In sum, arbitration is faster and more favorable to employees than litigation.