As a condition of employment, many employees must sign an employment contract. It is common for such agreements to contain arbitration clauses. Arbitration clauses may also be embedded in handbooks that employees are directed to sign, acknowledging that they have read and agree to the terms. Often times employees sign arbitration agreements without looking them over and understanding exactly what they are agreeing to.
By signing any type of a contract with an arbitration clause, the employee is agreeing to resolve all work-related disputes through arbitration instead of through the court system. In addition to foregoing the right to sue their employer, some arbitration agreements contain class action waivers, meaning an employee promises not to be a part of any class action lawsuit brought against the employer.
So what is arbitration? Arbitration is an alternative way to resolve legal disputes outside of the court system. Both parties present their sides of the argument to an arbitrator or panel of arbitrators. An arbitrator is an individual (very often a retired judge) who is paid to serve as a neutral overseer of the dispute. The arbitrator listens to any witnesses, reviews the evidence and issues a decision and award (if any).
Employers include arbitration clauses in employment contracts to avoid time-consuming and costly litigation. These benefits can also be good for employees who wish to resolve any dispute in the most efficient manner possible. Because arbitration is much less formal than a court proceeding, it can also be a less intimidating process for employees who may not have any experience being in a courtroom before a judge.
Besides these advantages, arbitration also has its downsides. Juries in a court case often sympathize and side with employees over their employer companies, therefore, having a single individual decide the dispute rather than a group of jurors can be a disadvantage. Additionally, because the arbitration process is more streamlined, each side is only able to seek a limited amount of information and documents from the other. Compared to the liberal discovery process allowed during litigation, this puts employees at a disadvantage because much of the evidence related to their claim is typically in the employer’s possession. Lastly, the biggest downside to arbitration is that it is generally final and binding and cannot be appealed. Therefore, both sides are stuck with the outcome that the arbitrator decides and there is no option to have a second set of eyes review the arbitrator’s decision to ensure it is correct and fair.
The question then becomes, how do employees avoid being subject to mandatory arbitration if such agreements are so commonplace? Employees may attempt to negotiate with their employer prior to signing any agreement containing an arbitration clause, however, employers can refuse to hire an employee who does not sign the agreement. Another option is having an attorney review the agreement prior to signing to advise on the best decision. Because employees may often be pressured into signing these agreements by their employers, courts which deem an arbitration agreement to be unconscionable may refuse to enforce the agreement. Examples of unconscionable agreements are ones which are so one-sided, unfair, or deny employees certain guaranteed protections under the law. Overall, those employees who have already signed an arbitration agreement are best served by having an employment attorney review the agreement to advise on the best course of action to pursue when a dispute arises with their employer.
This article is presented by the Dallas employment lawyers at Clouse Dunn LLP. To speak to an employment law attorney about an arbitration or employment agreement matter send an email to [email protected] or call (214) 239-2705.
About Keith Clouse / Dallas Employment Attorney Keith Clouse
Keith Clouse is an employment law specialist with over 25 years of experience representing senior executives, business owners, physicians, and corporations in complex employment litigation, arbitration, and negotiations. Senior executives, physicians, and other professionals consistently rely on Mr. Clouse for employment law expertise and advice on employment contracts, covenants not to compete, severance agreements, equity awards, trade secret disputes, and breach of fiduciary duty claims. Source CDKLawyers.com
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