Galit Kierkut, When to Arbitrate or When Not

Conflicts between companies and employees are an unfortunate reality in our professional world. As a microcosm of society itself, businesses cannot be expected to function flawlessly without any disagreements between employers and employees. The issue, therefore, becomes one of how to best handle these types of situations. The first step, obviously, is to simply avoid them altogether. It is prudent that companies and their employees both agree on and are clear about the expectations for their work agreements and contracts, and the consequences for not following through on these expectations. Aside from proactive steps to avoid these situations entirely, businesses and employees must decide on when to pursue varying levels of legal actions. For employers that do not rely on Employment Practices Liability Insurance (EPLI), the trend is often to pursue arbitration because it provides a level of certainty in costs and processes.

As employment and labor attorney Galit Kierkut writes in her article “To Arbitrate or Not to Arbitrate; That is the Question”, “employers might favor arbitration in employment contract disputes because arbitration is generally more cost-effective, is typically a private proceeding, is not decided by an unpredictable jury, and provides for limited rights to appeal”. In short, arbitration is relatively certain and that is a comforting fact when facing any type of legal issue, either for a company/organization or an employee. However, these types of proceedings are not without their own drawbacks. “Weighing against arbitration are issues like the employer bearing the cost of the arbitration, the fact that the arbitrators are perceived to be more likely to attempt to reach a compromise award regardless of the merits of the case and are less likely to dispose of a non-meritorious case in motion practice”.

That is why EPLI is so useful. It is a type of liability insurance that covers wrongful acts arising from the employment process. These claims typically fall under wrongful termination, discrimination, sexual harassment, defamation, invasion of privacy, failure to promote, deprivation of a career opportunity, and negligent evaluation. These issues, although uncomfortable for employers and employees, are commonplace in the business world and that is why attorneys and legislation exist to handle such issues.

For Galit Kierkut, the issues surrounding arbitration and employment disputes are very familiar. She currently works for Sills Cummis & Gross, a full-service corporate law firm with offices in New Jersey and New York. Their clients range from Fortune 500 to emerging growth and foreign corporations doing business in the United States.