Zev Eigen and David Sherwyn urge that, at a theoretical level, employment arbitration is superior to litigation because claimants are more likely to obtain a hearing irrespective of their income even if unable to attract counsel; and that empirical studies finding outcomes more favorable to employees in litigation than in arbitration are plagued by serious selection-effect problems.
The only comparison courts and policymakers should be making when assessing whether and to what extent arbitration is superior to litigation as a forum for resolving employment claims is how well does arbitration compare to the reality of employment litigation. Court actions are a problematic forum for addressing most employment disputes. The lower the compensation earned by the employee, the less likely it is that litigation provides a meaningful mode of obtaining redress. Similarly, the more likely an employer is a large, institutional repeat player in litigation, the more likely it is that the employer will be able to exploit the legal system to its advantage in the short run, by avoiding paying damages owed in legitimate claims, and in the long run, by selecting only the best cases to pursue in litigation, maximizing the development of employer-friendly precedent.
The primary objective of an employment dispute system should be to maximize the probability that employees who are actually wronged will recover the damages to which they are entitled – not less, not more. At the same time, the system should minimize the risk of employers having to pay out on baseless claims in order to avoid the costs of defending against such claims. This could be characterized as a distributive justice focus. The system must provide redress for those wronged in violation of the laws irrespective of their income, even if such broader access is obtained at the cost of sacrificing higher-value award for some claimants. This is perhaps in keeping with Samuel Estreicher's criticism of the litigation system as a “Cadillac” available to a limited percentage of employees, as compared to mandatory arbitration, which is like a “Saturn,” and thus available to many more, even if it lacks the fancy bells and whistles of the Cadillac. All else being equal, we prefer a dispute-resolution system that has fewer and lower barriers to its utilization, so that even lower-paid employees have a mode of redress.