When Employees Win, What Compensation Do They Actually Get?:

When people talk about workplace disputes – such as cases alleging discrimination or unpaid wages – the focus is usually on whether an employee wins their case. 

But an equally important question often gets overlooked: what do employees win? Do workers actually receive meaningful compensation? 

Does it matter whether their case is decided in court or through employment arbitration? 

A new study led by Cornell University researchers and nationally recognized experts in employment law takes a closer look at these questions. The research was conducted by Harry C. Katz, Jack Sheinkman Professor and Director of the Scheinman Institute, David Sherwyn, a Cornell Hotel School professor who studies employment law and workplace conflict, Lewis L. Maltby, President of the National Workrights Institute and a longtime advocate for workers’ rights, and Theodore J. St. Antoine, the renown Professor of Law Emeritus at the University of Michigan. Together, the research team brings decades of experience studying how workplace disputes are actually resolved.

The study was designed to address a common belief in public debates about employment arbitration: that workers receive lower compensation in arbitration than they do in court. 

The researchers wanted to understand whether these differences really exist, why they might exist, and whether they affect most workers or only a small share of them. This research builds on previous research conducted by the same team of scholars showing that employees win much more often when their case proceeds through an employment arbitration track (19% of the time) versus a litigation path (1% of cases). The very low employee win rate in the litigation path is due to the fact that so many cases in a litigation path are settled in favor of employers on motion and thereby never get to trial.

To answer the questions addressing what employees who win cases actually gain, the team examined employment cases from 2023 and 2024 in which workers successfully brought claims. They reviewed cases resolved through employment arbitration as well as cases decided in federal court. Instead of simply comparing total dollar amounts, the researchers looked at different types of awarded compensation separately, including lost wages and other forms of damages when allowed under the law. 

The study’s most important finding is that when workers win their cases where potential back pay is at stake, both employment arbitrators and courts, on average, award full lost wages. In other words, if an employee was illegally fired or in some other way denied pay they deserved, they typically receive that money regardless of whether their case is resolved through employment arbitration or in court. The study found no evidence that arbitrators routinely underpay workers when it comes to basic economic compensation.

The research does find that court awards on average are greater than employment arbitration awards. Why is this? The answer has less to do with unfairness and more to do with who uses each system. Court cases are expensive, slow, and legally complex, which means they usually involve higher-paid workers and larger claims. Arbitration is faster and less costly, making it the only realistic option for many workers with smaller, but still legitimate, claims. Because employment arbitration involves more of these lower-dollar cases, average awards in arbitration tend to be smaller even when workers receive what they are legally owed.

The study did, however, find meaningful differences in certain types of compensation beyond lost wages. Courts are more likely than employment arbitrators to award damages for emotional harm and to impose punitive damages in cases involving especially serious misconduct. Arbitrators award these types of damages (liquidated or punitive) much less often. However, these differences do not affect most workers who win in employment arbitration. More than half of successful arbitration cases involve laws that only allow lost wages, meaning workers in those cases would not have received additional compensation if their cases had followed a litigation path. Overall, the researchers estimate that about seventy percent of workers who win in employment arbitration would receive the same result if their cases had been heard in federal court, while roughly thirty percent might have received more.

These findings challenge the idea that employment arbitration is fundamentally unfair to workers. For many people, arbitration provides the only practical path to justice – allowing workers to bring claims they could not afford to pursue in court, delivering outcomes that are often the same as those produced through litigation. At the same time, the research identifies a real concern: arbitrators are less likely to award certain types of damages that the law already allows. According to the researchers, this is not a reason to eliminate employment arbitration, but it is a reason to improve it through clearer rules, and better arbitrator and advocate training.

Ultimately, this Cornell-led research suggests that the debate over employment arbitration should move beyond simple claims that one system is always better than the other. For most workers, arbitration is an accessible path and provides meaningful relief. The real challenge is ensuring that employment arbitration fully delivers all of the remedies the law promises, while continuing to offer workers an accessible and efficient way to resolve workplace disputes.