Lawsuits are expensive and inconvenient, but employee litigation can be even more painful for companies, executives, and managers. Employee lawsuits hamper morale and could encourage other employees to follow with their own lawsuits. This kind of litigation can also expose information that companies would rather keep quiet. Additionally, such litigation can generate nasty PR.
Fortunately, employers can minimize many employee lawsuits and their fallout through arbitration agreements, where a neutral arbitrator hears the facts of the dispute and makes a binding ruling. A study by Alexander Colvin of Cornell University found that employers win more often in arbitration than in litigation, employee awards are less, and the proceedings move much faster.