The difference between mediation and arbitration

Despite your attempts to comply with all local, state and federal regulations regarding employment, you may eventually find yourself in dispute with a current or former employee. Alternative dispute resolution techniques are available in place of litigation and offer benefits to you and your employee alike.

There are multiple ADR options available. Among those often used are arbitration and mediation. Though they seem similar on the surface, they are fundamentally different.


Arbitration is similar to litigation in that a third party presides over the proceedings and makes a decision after hearing both sides present their cases. In many instances, the arbitrator’s decision is legally binding, meaning that both you and your employee must abide by it.

Arbitration is different from litigation in that it takes place in a less formal setting and is often less expensive.


The goal of mediation is for both parties to work together to come to an agreement that is mutually beneficial. Mediation is confidential and voluntary. Once the process has begun, either party can choose to put a stop to it. Nothing discussed during mediation needs to become part of the public record after the fact, which is beneficial if it involves matters that may be sensitive or embarrassing for either you or your employee.

Like arbitration, mediation involves a neutral third party. However, the mediator’s role is different from that of the arbitrator in that he or she tries to facilitate productive discussions between the two parties. The mediator does not make any decisions or judgments about the case as the arbitrator does. Like arbitration, mediation is less expensive than litigation and does not take as long, typically requiring only one session.

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