A consumer arbitration case before the U.S. Supreme Court will affect how cost efficient arbitration is for employers. The case involves whether an appeal of a district court's denial of a motion to compel arbitration stays the litigation or the litigation continues during the appeal.
"Many employers use arbitration agreements to provide a faster and less expensive manner of resolving disputes outside of court," said George Reeves III, an attorney with Fisher Phillips in Columbia, S.C.
Another benefit of an arbitration agreement is that it can restrict employees from bringing class claims and allow employers to resolve claims on an individual basis, he noted. "If the Supreme Court sides with the plaintiffs in this case, then many of these benefits will be lost," he said.
For example, in an individual claim, the employee will be able to continue to engage in expensive "discovery" in court while the employer awaits an appeals decision that may reverse the court and send the matter to arbitration. Discovery is the formal process of exchanging information between the parties about the witnesses and evidence they will present at trial. If claims are brought as a class, employees will be able to begin extensive and costly discovery they may not be otherwise entitled to while the matter is pending appeal, Reeves said.
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