JEFFERSON CITY – Last month, the Forced Arbitration Injustice Repeal Act was passed by the U.S. House of Representatives. The proposed legislation sets out to do away with arbitration contracts for employment, consumer, anti-trust or civil rights disputes.
“I would be surprised if it passes the Senate, but if it were to pass it would have a detrimental effect,” said Ray McCarty, president and CEO of Associated Industries of Missouri. “The whole deal behind arbitration is trying to make sure that you make it less expensive for the businesses and the disgruntled employee. And because there are nationally accepted rules on arbitration that are followed in these cases, it just makes it a less expensive way to get things done.”
A number of studies have, in fact, shown that arbitration is typically cheaper, faster, and more efficient than litigation in court and that employees win more often and collect higher awards in arbitration than in court.
Associated Industries of Missouri President and CEO Ray McCarty | Photo courtesy of Associated Industries of Missouri
According to an article published in The Hill, an NDP Analytics study of more than 100,000 employment cases found the average award in arbitration was $520,630 while in court, the average award was $269,885. The study also found "that employees whose cases were arbitrated to completion won three times as often as employees who tried their cases to completion in court – 32 percent compared to 11 percent," the article states.
McCarty said that legislators throughout the state have actually filed bills attempting to enforce current arbitration laws.
“We have filed bills the last several years to try to enforce those arbitration agreements," McCarty said. "We’ve just never been able to get the bill completely done and it’s one we will continue to try again next year on.”