Social context and employment lawsuit dispute resolution

Abstract

Purpose Using an institutional theory perspective (micro and macro), the authors examined employment lawsuits across case type and alternative dispute resolution methods (negotiated settlements versus trials and arbitrations). Design/methodology/approach The authors examined actual data from US federal court lawsuits (N = 98,020). The data included the type of lawsuit, the dispute resolution method used and the outcome of the lawsuit in terms of the dollar amounts awarded. Findings The results show that employers were more likely to win in high social context cases (civil rights) than in other cases (Employment Retirement Income Security Act of 1974, ERISA). In arbitrations, plaintiffs won more frequently and were awarded higher amounts in arbitration than in court trials. In arbitration, plaintiffs received more in high social context cases than in other cases. Practical implications The results show that employers lose more often and in larger dollar amounts in arbitration than in litigation. However, if arbitration rulings more closely matched the likely outcomes of trials, subsequent litigation would be less likely to be overturned, and transaction costs would be reduced. If this were the case, the arbitration of employment lawsuits would more closely match the arbitration of contractual grievances under the typical labor relations system, where the arbitrator’s decision is usually final and binding. This could be a better outcome for all stakeholders in the dispute resolution process. Originality/value This is the first study of its kind to examine actual workplace conflicts that result in employment-related lawsuits from the perspective of social contextual factors.