Should executives include an arbitration clause in their employment contracts? There’s no uniform answer, of course. Arbitration proponents cite its speed, cost, privacy, informality, minimal discovery, and limited appellate rights. Opponents cite pretty much the same list. Volumes have been written about whether arbitration is a better form of dispute resolution than litigation, and we can’t resolve that question here.
But thanks to relatively new state laws requiring public disclosure of certain arbitration information, we can look at the question statistically. Even better, people who understand statistics can look at the question statistically, and we can report what they say.
We started by looking at the data set disclosed by the American Arbitration Association (AAA) concerning employment-based arbitrations. (A detailed explanation of the data, and the data itself, is available on this page of the AAA’s website.) One field of the data reports the employee’s salary in four categories: $250,000 or greater; $100,000 to $250,000; $0 to $100,000; and, regrettably, “not provided by parties.” Over the past five years, the AAA database reports about 7700 employment arbitrations (not necessarily separate “cases”; some cases have multiple records, usually reflecting multiple respondents), but only 2912 of these included data for the employee’s salary range. The following table shows the breakout of records by salary range:
Emp. Salary
|
Number
|
Pct of Total
|
$0 to $100,000
|
2284
|
78.4
|
$100,000 to $250,000
|
412
|
14.1
|
$250,000+
|
216
|
7.4
|
Total (excl. no data)
|
2912
|
100.0
|