By Francine Foner, Esq. and Ty Hyderally, Esq.

One of the reasons that employers favor resolving employment disputes through arbitration over going to court is that arbitration is private. In contrast, courts are open forums in which the public is able to become aware that an employer has been sued by an employee and the nature of the employment dispute. That is why arbitration forums are sometimes referred to as “secret courts.”  However, the secret nature of employment arbitration proceedings in New Jersey may soon be a thing of the past, due to new statutory disclosure requirements recently enacted.

On January 21, 2020, Governor Murphy signed into law Bill S1490, entitled an Act concerning arbitration organizations (“Act”), which supplements the existing New Jersey statute governing arbitration and arbitration proceedings (N.J.S.A. §§ 2A:23B-1 — 2A:23B-32). The Act takes effect May 1, 2020. The Act, among other things, requires arbitration organizations handling more than 50 consumer arbitrations per year to collect, publish and make available to the public on a quarterly basis, various details about such arbitrations during the preceding five years.

Although the Act concerns “consumer arbitrations,” among the information to be made publicly available is whether any of those arbitrated disputes involved “employment.” The Act further requires arbitration organizations to disclose “the amount of the employees’ annual wage divided into the following ranges: (a) less than $100,000; (b) $100,000-$250,000, inclusive; and (c) more than $250,000.”

Other information to be publicly reported by such arbitration organizations includes: the name of the corporation or other business entity that is a party to the arbitration, how many prior arbitrations a business party has participated in, the disposition of the disputes, the amount of the claim and award, the name of the arbitrator, and the amount and allocation of the arbitrator’s fees.

These disclosures could very well cause New Jersey employers to think twice before deciding to arbitrate employment disputes, rather than selecting a judicial forum. While court proceedings are public, courts are not required to make similar disclosures identifying the amount and types of claims filed against particular businesses. In contrast, as a result of this new disclosure requirement, individuals will now have access to quarterly reports showing the types and amounts of claims arbitrated by a particular business entity. Thus, employers may now be less enthusiastic about arbitrating employment disputes, which will create a handy data base of prior employment discrimination, retaliation and other types of employment claims available to employees and their counsel. Time will tell whether this legislation will have any impact upon employers’ preference for requiring employees to arbitrate employment disputes as a condition of their employment, rather than litigating in court.

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