Arbitrator Diversity Lacking as Employers Push to Use Them (1)

Alternative dispute resolution service providers are working to increase gender and racial diversity within their rosters at a time when more and more companies are moving employment disputes into arbitration.

About 80% of American private-sector, nonunion workers will be required to use arbitration to settle disputes by 2024, according to a 2019 report from the left-leaning Economic Policy Institute and the Center for Popular Democracy.

With companies increasingly using employment contracts to bind workers to resolve employment disputes outside of court, there should be more urgency to have those claims heard by arbitrators who reflect the diverse backgrounds and life experiences of the US workforce, legal observers said.

Yet the arbitration field remains dominated by White men.

Arbitrator rosters are first selected and compiled by ADR service providers. Both parties to an arbitration narrow down that list until they reach a consensus on the arbitrator overseeing their case.

Arbitrators who are accomplished in their field and well known—like jurists or Big Law attorneys—are prioritized by the parties, legal observers said. Women and people of color, historically underrepresented in those areas, are often excluded as a result.

But there have been improvements in racial, ethnic, and gender diversity among alternative dispute resolution service providers in recent years.

Diversity Pledge

Diversity advocates like Homer La Rue, president of the National Academy of Arbitrators and a professor at Howard University School of Law, believe historical barriers could be removed if ADR providers pledge to include at least 30% diverse arbitrators on any list with three or more candidates.

This metric would include racial minorities, persons with disabilities, women, and members of the LGBT community.

The campaign is part of the Ray Corollary Initiative, which advocates for gender and racial diversity in the arbitrator and mediator pool. La Rue serves as its board chair.

The initiative wants those who “select arbitrators to begin to understand that the ADR community faces an existential threat at this point,” La Rue said. “That threat is its legitimacy, which arises out of the fact that the decision-makers don’t reflect the workplace.”

“The workplace is not a workplace of White old males,” he said. “If the decision-makers continue to come predominantly from one demographic group, then arbitration and mediation are going to be viewed eventually as illegitimate” because they don’t reflect the varied backgrounds of employees with workplace disputes subject to arbitration and can’t relate to their lived experiences.

Some of the cases in arbitration, for instance, involve claims of civil rights violations.

“For too long the ADR community has ignored this problem,” La Rue said.

The 30% metric would help usher in more gender and racial diversity because that means a minority candidate would statistically be more likely to get selected, said Ohio State University Moritz College of Law professor Sarah Rudolph Cole.

The parties have the final say, and they typically select someone who’s known and has years of experience in their profession, Cole said.

“The problem is that even if you diversify your roster, you still have to get these people picked,” she added. “The big obstacle is that the general counsel of companies, or external counsel, don’t want to pick arbitrators they don’t know. So there’s a huge gap between getting on the roster and getting picked.”

By the Numbers

The three primary arbitral entities that resolve employment disputes are the Institute for Conflict Prevention & Resolution, the American Arbitration Association, and JAMS: Mediation, Arbitration and ADR Services.

At the CPR, 41% of its panel of neutrals self-identify as women, persons of color, members of the LGBTQ community, persons living with disabilities, or other under-represented groups as of June 30, 2022, the end of its fiscal year, the firm told Bloomberg Law.

Of its employment panel’s 166 neutrals as of Jan. 4, 2023, 36% identified as female and 64% male, it said. The breakdown by race and ethnicity is: White, 127; Black, 24; Hispanic or Latino, 10; and Asian, 5. The CPR’s employment panel is a subset of its total roster of neutrals, which it said had 643 members as of June 30, 2022.

The firm accepted RCI’s diversity pledge in 2021, and said it’s been tracking the percentage of diverse neutrals selected and participating in efforts to increase the representation of diverse neutrals in dispute resolution.

AAA said as of the end of last year, its active panel members are 30% women and 41% ethnically or racially diverse.

Meanwhile, JAMS’ panel consisted of more than 30% women by the end of 2022, and more than half of its employment- and labor-related disputes are handled by diverse panelists, CEO Chris Poole said. Of its 420 neutrals, 409 self-identified their race or ethnicity. The breakdown for JAMS was: White, 350; Black, 29; Hispanic, 16; American Indian/Alaskan Native, 2; and Asian/Pacific Islander, 12.

Poole acknowledged that there’s more work to do to increase diversity.

JAMS has adopted rules requiring that the list of arbitrators provided to the parties has at least two ethnically or racially diverse candidates when the list consists of seven or more names, he said.

“We ensure that the options our clients have on the strike list have a fair representation of diverse panelists. And then, of course, it’s up to them to make that choice,” he added.

Building the Pipeline

It’s vital to have educational outreach efforts to help women, people of color, and members of other unrepresented groups explore career opportunities in arbitration because the lack of diversity is a pipeline issue, said Charlene MacMillan, an arbitrator who previously worked in labor-management relations as an adviser, advocate, chief negotiator, and liaison between employers and unions.

“It’s a fairly obscure profession. It’s not necessarily the kind of job that the average person can identify as being a career,” said MacMillan. “We have to reframe arbitration as something you can actually build an actual career out of,” she added.

Another way to achieve greater diversity is for ADR providers to look beyond Big Law for arbitrators, Ohio State’s Cole said.

The RCI hopes more ADR service providers and users, like those in public sector labor relations, will take on its pledge.

Philadelphia and the city’s Fraternal Order of Police recently committed to increasing racial and gender diversity in their selection of arbitrators, using a 40% metric, La Rue said. A majority of Amtrak unions as well as the National Rural Letter Carriers’ board also have adopted the pledge.

“While the success is not as fast as I’d like it to be, I think what I’m seeing is an increased understanding of having a metric that makes the search of diverse neutrals more than an aspiration,” La Rue said. “It makes it something you can measure.”