yesterday at 1:18 PM
Sub-Topic #1: Bound by ADR?...Say goodbye to full-time jobs with benefits...
Hello Everyone,
Since an employer is provided the benefits of an employee's labor and often compensates them far
below the monetary value they bring to the organization; the tradeoff for that is the employer's
responsibility for the safety, welfare and protection of the employee. If an employer does not want those
responsibilities they can utilize contract labor which is free from harassment, workers compensation and
most other legal protections (including wrongful termination claims). On the other hand, the employer
has much less control over the person. If Bill Compton was an independent contractor there would be
no arbitration clause, no employee handbook, no employment termination and no claim of unfair
dismissal. From the employer's perspective, how is that not a perfect scenario?
Do you think that employers will eventually stop hiring employees because of the costs and responsibilities
and instead just hire contract labor?
“Say goodbye to full-time jobs with benefits
In 2005, the government estimated that 31% of U.S. workers were already so-called contingent
workers. Experts say that number could increase to 40% or more in the next 10 years. James
Stoeckmann, senior practice leader at WorldatWork, a professional association of human resource
executives, believes that full-time employees could become the minority of the nation's workforce
within 20 to 30 years, leaving employees without traditional benefits such as health coverage, paid
vacations and retirement plans, that most workers take for granted today.
"The traditional job is not doomed. But it will increasingly have competition from other models,
the most prominent is the independent contractor model," he said.”
(http://money.cnn.com/2010/06/01/news/economy/contract_jobs/)
If this data in the above article is accurate and the minority of workers will be full time employees are
you prepared for that transition? If you are not currently an independent contractor will you be ready to
become one? How will you handle not having any benefits (no minimum wage, no sick leave, no
retirement benefits from an employer, etc.)? The Affordable Care Act currently provides everyone the
opportunity to obtain health insurance coverage equal to what employer plans provide (lower cost,
fuller coverage, etc.) but there are no other federal protections (in general) for independent
contractors. How do you feel about this transition?
Professor Courtney Anderson
Reply
yesterday at 1:20 PM
Sub-Topic #1: Bound by ADR?...30 years as an "Exemplary Employee" and fired,
no pension, no retirement all because of an arbitration agreement? Fair?
Greetings All,
Do you think that employees like the one in this article below are getting a fair opportunity for
representation via binding arbitration? Why or why not?
“Fonza Luke had worked as a nurse for Baptist Health System's Princeton Medical Center in
Birmingham, Alabama, for 26 years when the human resources department summoned her to a
meeting about a new "dispute resolution program." Nurses, housekeepers, and lab techs crammed
into a conference room where hospital administrators presented a form and told them to sign.
Signing meant agreeing to submit any future employment-related complaints to an arbitrator hired
by the hospital and waiving the right to sue in court. Refusing to sign meant they'd be fired.
Luke had known the arbitration agreement was coming, and she didn't like the idea one bit—"I just
think it's unfair to be made to do something like that," she says. So before going to the conference
room, she slipped away to a pay phone and called her lawyer. He said, "Don't sign it. You'll be
signing your rights away," she recalls. Luke turned in the form without a signature in quiet protest.
A few weeks later, the hospital again ordered her to sign, and again she refused. Despite repeated
threats, the hospital didn't fire her, at least not then.
2/21/2017 MAIN TOPIC RESPONSE POST HERE Week 4 Topic #1: Bound by ADR? DMBA 610 9040 Ethical Leadership in Organizations & Society (2172)
https://learn.umuc.edu/d2l/le/202553/discussions/threads/9105778/View 3/8
Three years later, Luke traveled to Atlanta for a continuing-education class recommended by her
coworkers. When she returned, the hospital fired her for "insubordination" because she had been
cleared to take just one day off, not two. For 30 years, Luke had been an exemplary employee. Her
personnel file was full of praise for her performance; a review three weeks before the firing called
her a "role model." Many of the younger, white nurses Luke worked with had taken unapproved
leave, she observed, and kept their jobs. So Luke filed a race and age discrimination complaint
with the federal Equal Employment Opportunity Commission (eeoc), which conducted a lengthy
investigation, upheld her complaint, and recommended that Luke file a civil rights suit in federal
court, which she did in 2003.
That's when the surprise came: Baptist Health argued that Luke had given up her right to sue back
in 1997 when the hospital presented the arbitration agreement—even though she'd refused to
sign. Simply by continuing to show up for work, Baptist's lawyers said, she'd agreed to the terms.
Acting contrary to established contract law, which requires both parties to consent to a contract
before it becomes binding, a federal judge accepted the hospital's argument. Luke was forced to
take her civil rights case before Baptist's hired arbitrator, who dismissed it in short order. She had
no right to appeal. She'd lost not only her job but, because she hadn't yet reached retirement age,
part of the pension she'd worked toward for most of her adult life. Now Luke works night shifts at
two health care facilities to make up her lost salary.”
(http://www.motherjones.com/politics/2008/03/have-you-signed-away-your-right-sue)
Professor Courtney Anderson
Reply
Courtney Anderson
yesterday at 1:23 PM
Sub-Topic #1: Bound by ADR?...Arbitration costs $30,000 more per case than
litigation?! Is it a scam?
Everyone,
Let’s engage our critical thinking skills and assess the claims about the costs of arbitration!
“Which costs less: Arbitration or litigation?
A case study shows that when it comes to expenditures and resolution time, litigation is cheaper
and faster
December 6, 2012
[...]The big-picture takeaway is that arbitration is not a panacea to lowering litigation costs. [...]
The numbers game: Outside counsel fees, arbitration costs and number of months to resolution
Of the 19 cases in the study, nine were resolved through arbitration; 10 were litigated in court. The
study focused on outside counsel fees, arbitration costs, results and time to resolution. The study
demonstrates that arbitration—on average—is more expensive and slower than litigation. Although
the study analyzed employment-related disputes, the results can be extrapolated to estimate costs
and time to resolution in all types of disputes, including business and consumer-related disputes.
The numbers in the study are telling: The nine cases resolved through arbitration incurred a total
of $710,323.50 in outside counsel fees, with an average outside counsel bill of $78,924.84. The 10
cases in litigation cost an aggregate $631,443.28 in outside counsel fees but averaged roughly
$63,144.33 per case—less than $15,000 per case! The arbitration cases incurred $921,042.22 in
total costs and outside counsel fees, with an average per-case expenditure of $102,338.02. But in
the litigation cases, total costs and outside counsel fees were $704,908.20, with an average per-
case expenditure of $70,490.82—a difference of more than $30,000 per case! Arbitration fared no
better in getting to the finish line faster. For cases litigated in court, the median case lifecycle was
19 months. By contrast, the median arbitration case lasted 21 months.
One outlier case showed the arbitration process running amok. This arbitration case lasted 10
months longer than the longest trial and resulted in 62 percent higher costs than the most
expensive trial! This was due to having to reconvene a three- arbitrator panel several times—
months apart—to conclude the hearing. Whether in court or arbitration, moving the matter quickly
is always important to overall costs. The charts below summarizes 1) outside counsel fees; 2) total
arbitration costs and outside counsel fees; and 3) time to a resolution.”
(http://www.insidecounsel.com/2012/12/06/which-costs-less-arbitration-or-litigation)
2/21/2017 MAIN TOPIC RESPONSE POST HERE Week 4 Topic #1: Bound by ADR? DMBA 610 9040 Ethical Leadership in Organizations & Society (2172)
https://learn.umuc.edu/d2l/le/202553/discussions/threads/9105778/View 4/8
So, who is “right” (regarding which is cheaper) and what do you do as an employer? Is it a myth that
arbitration is cheaper so that ADR proponents can charge higher fees and dupe employers into entering
arbitration agreements with their employees? Assuming that litigation is cheaper (ahem, more cost
effective) than arbitration, is this an example of fraud, deceptive marketing or simply a case of “caveat
emptor”? The employer is marketed to by ADR providers to insert arbitration clauses into their
employment documents (based on the alleged “fear” and “costs” of litigation). Employees are not
marketed to (as they do not have the money to “buy” the ADR services). Are employers being taken
advantage of? What should be done about this?
Reply
yesterday at 2:04 PM
Should the Court hear Bill's claim or is he bound by the arbitration agreement?
The case of Compton v. Merlotte would seem to be a simple decision. The question of whether
or not the court should hear Bill’s claim is simple, no, they should not. When Bill read over the waiver for
the code of conduct handbook, signed his name on the dotted line, which indicated that he read,
understood, and agreed to those terms, it became a legally binding document. The fact that Merlotte
Enterprises uses arbitration to settle any disputes in the company makes Bill’s claims before the court
invalid. Arbitration is “a process agreed to by disputing parties, involving an arbitrator or arbitral panel, in
which a final and binding award is made, enforceable through the courts if necessary.” (Mayer et al, 2012, p.
130)
Pros:
The upside to using arbitration is the “disputes are generally handled at a much quicker pace and the
quality of the decision may be higher.” (Mayer et al, 2012, p. 131) This works out for the company and the
individuals in the long run since there are no extenuating court costs that are easily added up. When an
employee sues a company like Bill is doing, there is an unbearable amount of stress that is placed on the
company, the management, and the employee to ensure they are treated fairly.
Cons:
The downside to using arbitration is once the decision is rendered, that is the decision. There is not
an appeals process, nor is there a procedure where the losing party can take it to a higher court. For Bill’s
case, if he were to lose, especially if he is forced to use arbitration, then he would feel that he was cheated in
some way.
It is also important to note that one of Bill’s claims could stem from the fact that he may have never read the
sheet to begin with. This is actually not new to the general public. Many people are presented with Terms
and Conditions quite often, which is the small print for products and services. Similar to Bill’s situation,
they require and acceptance of understanding and agreement to the terms. According to Smithers (2011),
“the terms and conditions are read by only about 7% of people.” In another words, Bill could be part of the
93% that does not read the terms and conditions, which would also make one question whether he read this
document as well. Regardless of whether he read it or not, I still believe that Bill is held accountable for
agreeing to something that he did not agree to.
Based on the law and the agreement that Bill signed, the Court’s should refuse to hear Bill’s case. If Bill did
not want to agree to arbitration, then he should have never signed the paper.
References:
2/21/2017 MAIN TOPIC RESPONSE POST HERE Week 4 Topic #1: Bound by ADR? DMBA 610 9040 Ethical Leadership in Organizations & Society (2172)
https://learn.umuc.edu/d2l/le/202553/discussions/threads/9105778/View 5/8
Mayer, D., Warner, D. M., Siedel, G. J., Lieberman, J. K., & Martina, A. R. (2012). The Law, Corporate
Finance, and Management.
Smithers, R. (2011). Terms and conditions: not reading the small print can mean big
Reply
Joseph Barrow
yesterday at 7:17 PM
Week 4 - Topic #1: Bound by ADR?
I take two key phrases from this; one Bill Compton signed a form sta??ng he agrees to the
terms listed within the handbook before employment at Merlo??e. Second, Merlo??e
made a statement to their employees about the updates to the handbook where Bill
signed off on that as well.
Unfortunately, by signing the new arbitra??on agreement, Bill gave up any rights he has to
bring Merlo??e to court, although there are a few excep??ons like fraud or disregard of the
law by the arbitrator or panel of arbitrators. (Mayer, D., Warner, D., Siedel, G., Lieberman,
J., Dec. 29, 2012.). One other excep??on would be discrimina??on, Bill has the right to file
a complaint to a government agency such as Equal Employment Opportunity Commission
(EEOC) where the agency will then make the decision to move forward and sue Merlo??e
in court. Reason being is that the arbitra??on Bill signed only applied to him not to an
agency outside of the company that wants to step in such as the EEOC.
Advantages for arbitra??on is that it is quick, less expensive, and done by a specialist.
What is nega??ve about arbitra??on is that whatever decision made would be set in stone
and not liable for court. You are bind to whatever decision the arbitrator makes. Once
this decision is made, it is then final.
References:
Mayer, D., Warner, D., Siedel, G., Lieberman, J. (2012, Dec. 29) The Law, Corporate
Finance, and
Management.
Equal Employment Opportunity Commission. (July 10, 1997). EEOC No?ce Number
915.002.
Retrieved from h??ps://www.eeoc.gov/policy/docs/mandarb.html
Reply
Andrews Nortey
yesterday at 9:28 PM
Week 4 - Topic #1: Bound by ADR?
Hello Joseph,
Great post. I agree with you on the fact that because Bill signed the waiver document, it was
binding on him. I say this because although he was made to sign either willingly or forcefully,
he was not obligated to undersign it. He should have known it was a legal document he was
signing.
I believe in this case involving Bill, the court will not hear the case as the binding arbitration
clause included in the contract dictates that by agreeing to the terms, Bill is subject to any
decisions made by the arbitrator. To back my point is the Federal Arbitration Act (FAA), which
provides that the court has a mandate to enforce the arbitration.
More so, it would have been illegal if Bill's employer Merlotte had not informed employees of
the amendment waiver before making them sign, then Bill will have had a valid case.The fact
that employees were informed was an opportunity for them to make decisions by themselves or
consult the services of an attorney.
2/21/2017 MAIN TOPIC RESPONSE POST HERE Week 4 Topic #1: Bound by ADR? DMBA 610 9040 Ethical Leadership in Organizations & Society (2172)
https://learn.umuc.edu/d2l/le/202553/discussions/threads/9105778/View 6/8
Maxson, J. (2014). Binding Non-Signatories to Arbitration Agreements. The issue of Consent in
International
Commercial Arbitration.
United States. Congress. House. Committee on the Judiciary. Subcommittee on Commercial and
Administrative, L. (2010). Mandatory binding arbitration : is it fair and voluntary? : hearing
before the
Subcommittee on Commercial and Administrative Law of the Committee on the Judiciary,
House of
Representatives, One Hundred Eleventh Congress, first session, September 15, 2009.
Reply
yesterday at 9:00 PM
Should the Court hear Bill's claim or is he bound by the arbitra??on agreement? Discuss the pros
and cons and be sure to refer to the law in your textbook to support your views.
Case Analysis of Compton vs. Merlo??e
Facts
In the third year of Bill Compton’s hire, he signed an amendment to the employee guidebook as
well as the inclusion of a binding arbitra??on agreement. Compton signed a waiver agreeing to
abide by the provisions of the guidebook and arbitra??on agreement. Bill then went on with his
service and was a??erwards terminated. Compton then took a legal suit against Merlo??e with
allega??on of biased dismissal.
Discussion
The arbitra??on agreement both par??es entered into was voluntary. None of them imposed the
agreement on each other. From the facts of the case, the court should not allude to Bill’s
asser??on that he was unfairly dismissed from employment.
However, there are few considera??ons that the court ought to think of before their judgment to
hear the case. These includes: whether there was a legal offer; a reasonable and unambiguous
offer; and whether the offer was communicated to Bill Compton.
(Bagley & Savage, 2010), states that “an arbitra??on clause may list names
of poten??al arbitrators”. This was not present is this case. That is the case did not state the type
and number of arbitrators to be chosen as (Bagley & Savage, 2010). According to (Bagley &
Savage, 2010), par??es ought to state the issues and disputes to be resolved through
arbitra??on. Even though the descrip??on indicates employment disputes, there are no specific
issues men??oned. There is no men??on of who will arbitrate the dispute, scope of discovery, and
limits on damage.
Merlo??e asking all employees to sign the waiver may be ruled unfair. This is because the
employees were forced or pressured to sign the document. But with that said, they were not
obligated to sign. They should have used their discre??on. But because they con??nued to work for
employer they were agreeing to the terms of the agreement. This is backed by the law which
states that when an employee con??nues to keep their job, they are showing their assent to the
agreement
Considering the above analysis, my answer is no, the court should not hear Bill’s claim. Bill
Compton should be bound to the arbitra??on agreement.
To support this answer is a similar case by the U.S. 8th Circuit Court of Appeals decision on the
Owen v. Br??stol Care which asserts the employer's right to compel an arbitra??on even if the
employee seeking claims on behalf of a class (Crosby, 2013). The 8th Circuit court rejected Owen's
argument despite signing an arbitra??on agreement with her employer and upheld the terms of
the mandatory arbitra??on agreement (Crosby, 2013). The court also emphasized on the
employer’s right to use the mandatory arbitra??on agreements (Crosby, 2013).
The arbitra??on method of conflict resolu??on presents various advantages and disadvantages
(Sonne, 2014).
Pros
Avoids hos??lity? Because the par??es in an arbitra??on are usually encouraged to par??cipate fully
and some??mes even to help structure the resolu??on, they are o??en more likely to work together
peaceably rather than escalate their angst and hos??lity toward one another, as is o??en the case in
2/21/2017 MAIN TOPIC RESPONSE POST HERE Week 4 Topic #1: Bound by ADR? DMBA 610 9040 Ethical Leadership in Organizations & Society (2172)
https://learn.umuc.edu/d2l/le/202553/discussions/threads/9105778/View 7/8
peaceably rather than escalate their angst and hos??lity toward one another, as is o??en the case in
li??ga??on (Sonne, 2014).
Usually cheaper than li??ga??on? Resolving a case through arbitra??on is usually far less costly than
proceeding through li??ga??on (Sonne, 2014).
Faster than li??ga??on?According to a recent study by the Federal Media??on and Concilia??on
Services, the average ??me from filing to decision was about 475 days in an arbitrated case, while
a similar case took from 18 months to three years to wend its way through the courts(Sonne,
2014) .
Flexible? Unlike trials, which must be worked into overcrowded court calendars, arbitra??on
hearings can usually be scheduled around the needs and availabili??es of those involved, including
weekends and evenings.
Privacy? Arbitra??on proceedings are generally held in private. And par??es some??mes agree to
keep the proceedings and terms of the final resolu??on confiden??al. This helps in safeguarding the
privacy of both par??es (Sonne, 2014).
Cons
Lack of transparency?The fact that arbitra??on hearings are generally held in private rather than in
an open courtroom, and decisions are usually not publicly accessible, there is lack of transparency
which makes the process more likely to be biased (Sonne, 2014).
Ques??onable objec??vity? The process of choosing an arbitrator is not an objec??ve one,
par??cularly when the decision?maker is picked by an agency from a pool list, where those who
become favorites may get assigned cases more o??en (Sonne, 2014).
Uneven playing field? There is the concern that the "take?it?or?leave?it" nature of many
arbitra??on clauses work in favor of a large employer or manufacturer when challenged by an
employee or consumer who has shallower pockets and less power (Sonne, 2014) .
References
Bagley, C, Savage, D. 2010. Managers and the legal environment: strategies for the 21stcentury.
6th
edi??on. Mason, Ohio: Southwestern Cengage Learning.
Crosby Lehmann, C. (2013). Weigh pros and cons when considering mandatory arbitra??on. HR
Specialist:
Minnesota Employment Law, 6(4), 6.
Kubasek, N, Brennan, B, & Brown, N. (2005). The legal environment of business: a thinking
approach.
4th edi??on. Upper Saddle River, New Jersey: Pren??ce Hall:
Mayer, D., Warner, D., Siedel, G., Lieberman, J. (2012, Dec. 29) The Law, Corporate Finance, and
Management.
Sonne, M. M. (2014). The Pros and Cons of Employment Arbitra??on Agreements. Orange County
Business Journal, 37(33), B?53.
h??p://www.nolo.com/legal?encyclopedia/arbitra??on?pros?cons?29807.html
Reply
Vitalis Tasi
yesterday at 10:54 PM
Should the Court hear Bill's claim or is he bound by the arbitration agreement?
Discuss the pros and cons and be sure to refer to the law in your textbook to support
your views
The circumstances under which Bill Compton signed the arbitration clause were
very constrained. He probably knew it could come back to hunt him, however, he
could not afford to antagonist the management of Merlotte, so as to keep his job.
2/21/2017 MAIN TOPIC RESPONSE POST HERE Week 4 Topic #1: Bound by ADR? DMBA 610 9040 Ethical Leadership in Organizations & Society (2172)
https://learn.umuc.edu/d2l/le/202553/discussions/threads/9105778/View 8/8
1 / 1
Reply to Thread
In arbitration both plaintiff and defendant agree to use a jury that will make the ??inal
decision and will be binding (Meyer, et al. 2012). “The arbitrators might be retired
judges, lawyers, or anyone with the kind of specialized knowledge and training that
would be useful in making a ??inal, binding decision on the dispute” (p.130).
No, the court should not hear Bill’s claim.
From an entrepreneurship perspective, arbitration is faster, since the arbitrator has a
fewer cases compared with to court litigation (2012). Secondly, arbitrators are
specialized based on spectrum and complexity of the cases, therefore the choice of
the special panel is based on the speci??ic case. Merlotte was pretty clear on the
revised version of the handbook and informed its employees about the arbitration
clause.
On the other hand arbitration decisions are ??inal and have limited on zero chances of
appealing, unlike court proceedings, where appealing is possible. If the arbitrator
makes a mistake, from applying the law, both parties have to stand by the verdict,
which can be extremely frustrating.
References
Hoffman, M. M. (2013). The advantages and disadvantages of arbitration vs. court
litigation. http://www.tuckerlaw.com/2015/02/13/advantages?
disadvantages?arbitration?vs?court?litigation/
Mayer, D., Warner, D., Siedel, G., Lieberman, J. (2012). The Law, Corporate Finance, and
Management. Retrieved
from h??p://2012books.lardbucket.org/pdfs/the?law?corporate?
finance?and?management.pdf
Reply
yesterday at 11:34 PM
I solidly agree with you Vitalis that the court should not hear Bill's claim.
I say this because, I do not believe he has a case to bring forward. Bill's employer - Merlotte
Enterprises have every right to amend their handbook. In other words, employers generally
reserve the right to amend or modify the handbook. They usually have that reservation stated
somewhere in the handbook, and that will generally suffice as notice to you.
Though not required by law, employers should consider requiring employees to sign the
employee handbook acknowledgment form. In addition, employers may require employees to
sign an acknowledgment whenever an updated handbook is distributed.
Hence, if an employee signs in agreement, the arbitration is effective and binding (Bagley
&Savage, 2010). That said, depending on the circumstances and specific details of your matter,
you may have some legitimate grievance based on your expectations and the course of dealings
with your employer.
It is not clear why he was discharged but according to the wording, there have to be a specific
reason or a specific dispute in order for arbitration to proceed. There should be a more
structured process on what exactly constitutes a “dispute” (Bagely and Savage,2009, pg 90).
Reference
Bagley, C, Savage, D. 2010. Managers and the legal environment: strategies for the
21stcentury. 6th
edition. Mason, Ohio: Southwestern Cengage Learning.
