The Arbitration Process

What is Arbitration?

Arbitration is the most common ADR process used in the workplace.

Arbitration involves the submission of a dispute to an independent, third party neutral who is chosen by both parties to resolve a dispute, and who renders a final binding decision.

How Does it Work?

Step one: Pre-arbitration Process

Usually the dispute goes through "grievance steps" in an attempt to settle the dispute before submitting it to arbitration. These steps include meetings or informal hearings between the employee (or union if represented) and progressively higher levels of management.

Step Two: Decide which issues are covered

Workplace conflicts, violations of company policy, and statutory employment claims may be covered; everyday "gripes" should be excluded or resolved at the earliest grievance steps.

Step three: Determine who is covered

Coverage may not include all employee groups and may or may not include supervisors or managers.

Step four: Set parameters for discovery

In arbitration there is minimal right to discovery; less than in litigation, but enough so that both sides have an opportunity to obtain the information necessary to present their case.

Step five: Select an arbitrator

Qualified neutral arbitrators may be found through providers such as the American Arbitration Association (AAA) or the Federal Mediation and Conciliation Services (FMCS). Both employees/union and the company should have access to information about available arbitrators and should jointly make the selection. If they disagree, they can use an alternate strike method as a means of selection.

Step six: Arbitration Hearing

During the arbitration hearing, each side presents evidence through witness testimony and documents and may be recorded stenographically. Strict rules of evidence usually are not applied. Although the hearing is somewhat informal, it is held in an orderly fashion with an opportunity for opening and closing arguments, cross-examination, rebuttal testimony, written briefs, and representation if desired (the representative may or may not be an attorney).

Step seven: Arbitration Decision

The arbitration decision provides a remedy and explains the reasons for the arbitrator's conclusions. The decision can be appealed on narrow grounds only. Legal error, rather than factual error, or bias usually constitutes the basis for appeal.


  • Arbitration is generally perceived as a fair and unbiased system.
  • Arbitration resolves a dispute with finality (minimal appeal rights).
  • Less costly and speedier than court litigation.
  • The choice of arbitrator, timing of the hearing and issues to be decided are all within the control of the parties.


  • Arbitration remains a relatively formal process (though less formal than litigation).
  • Arbitration may emphasize the adversarial process rather than reconciliation, which is facilitated through mediation.
  • Some questions remain as to whether courts will defer to the ¬†Arbitration Program.