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Comment by nickff | Hacker News Reader

By disallowing mandatory arbitration, you are essentially putting a substantial risk premium on the deal (and undiversified entities will probably have to buy insurance for it). This extra cost is likely to be reflected in reduced demand (i.e. less hiring) or reduced price (or salary); I am not sure this is a desirable policy.

In any case, isn't this whole problem caused by an ineffective, slow, costly, and unpredictable legal system? Would it not be better to fix the courts, so that people actually wanted to use them?

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http://digitalcommons.ilr.cornell.edu/cgi/viewcontent.cgi?ar...

"Estimates of employee win rates and damage award amounts based on the AAA-CC filings data indicate that arbitration outcomes are generally less favorable to employees than those from employment litigation."

"These results suggest that, while a substantial minority of employees use self-representation, in the large majority of instances employees are retaining counsel to represent them in employment arbitration. The cases in which employees do have representation by counsel are on average those in which they have a greater chance of success and recover larger damage awards. Thus employment arbitration appears to be a dispute resolution system predominantly based on employee representation by counsel, as is the case with litigation."

So the takeaways here are the arbitration is worse for employees than litigation, and that employees usually need a lawyer for the arbitration process. The study notes that more research is needed, but it's far from clear than arbitration is a good idea for larger complaints, much less as the only option available.

I would love to see some citation that shows businesses without mandatory arbitration clauses have to buy insurance or otherwise have to offer lower wages. This sounds very similar to other unsubstantiated but oft-repeated arguments about unionization, torts, consumer protection laws, etc.

I don't disagree with you about the legal system, but how exactly will the court system become reformed through disuse?

There are also papers which support the notion that arbitration is more favorable to the complainant.[1] We can all cherry-pick documents that support our prior beliefs, but if neither side can convince the other, as is the case here, I think it is more fair to say that the evidence is unclear.

Nobody has to buy insurance against employee claims, but many of the largest insurers offer it, which suggests that this is a common issue.[2]

[1] http://repository.law.umich.edu/cgi/viewcontent.cgi?article=...

[2] https://www.nationwide.com/employment-practices-liability-in...

The paper that you cited doesn't contradict anything I said or support what you're saying:

"...even the more refined recent studies show that lower-paid employees still had quite respectable success rates in arbitration, ranging from about 21% to almost 40%. That compares very favorably with the 23% win rate of union-represented employees that I found in one of the oldest and most respected labor arbitration systems in the country."

The author is comparing arbitration and arbitration, not arbitration and courts. Is there any place in the article where he addresses the research in the other paper, or is he just saying "it's not that bad."

Also, I'm not sure what the existence of insurance against employee claims has to do with the claim that wages would be lowered? Do you have any evidence for a connection other than inductive reasoning?

>"Experienced plaintiffs' attorneys have estimated that only about 5% of the individuals with an employment claim who seek help from the private bar are able to obtain counsel."

>"One study concluded that litigation is not a plausible option for employees below around the $60,000 income level, but arbitration is a realistic alternative"

>" The American Arbitration Association in one study found a winning rate of 63% for arbitral claimants. 41 In a much-criticized system operated by the securities industry, employees still prevailed 55% of the time, according to the U.S. General Accounting Office." By contrast, plaintiffs' success rates in separate surveys of federal court and EEOC trials were only 14.9% and 16.8%, respectively."

Did you read any of the paper at all?

...uh, still comparing apples to oranges, I see, and the American Arbitration Association hasn't published their full dataset, but according to their internal study that contradicts external studies, it's great? Here's a paper that digs into this a bit more:

http://digitalcommons.ilr.cornell.edu/cgi/viewcontent.cgi?ar...

So if people don't have access to legal representation below a certain income level, the solution is not to increase accessibility to courts or to allow them to represent themselves in court, but instead to set up binding arbitration where they also have no representation? Do you feel that in abstraction, a neutral observer would reach that conclusion?

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