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Mandatory Arbitration Agreements

Mandatory Arbitration Agreements

Many employers now require workers to agree to settle all future grievances via binding arbitration.

Often an employer requests that a new or existing employee sign a code of conduct or employee manual that contains stipulations surrounding the terms of employment. One common provision in these documents is an agreement to use binding arbitration in the event that the employer-employee relationship turns sour and a dispute arises. If the employee is the member of a union, the union may have agreed to settle disputes via arbitration through a collective bargaining agreement, which is applicable to all covered union employees. Unfortunately, many employees may not be aware that their employment relationship is subject to a mandatory arbitration agreement or understand that this involves giving up some of their legal rights.

What Is Arbitration?

Arbitration involves the use of a neutral third party, also known as an arbitrator, to settle disputes between two conflicting parties. It is used in a variety of legal settings, including employment disputes.

Arbitration can be a quick and inexpensive way to resolve legal disputes. Rather than going to court, arbitration allows parties to meet outside of the courthouse to present their respective sides of the story and address the problems. This can make the process significantly more efficient and less stressful than traditional litigation.

Arbitration has downsides for workers, however. Because it is often binding, the decision of the arbitrator is usually final and difficult or impossible to appeal. An employee who receives an unfavorable outcome from the arbitration process cannot later file a lawsuit against the employer for the same incident. Further, the damages available to a plaintiff in arbitration can be significantly less than those available in court.

Consequently, it is important for an employee to know exactly what to expect and to have the counsel of an experienced employment attorney to address the issues involved prior to going to arbitration.

Should I Be Concerned About an Arbitration Agreement?

On its face, an arbitration agreement may be worded in a way that seems unfair to employees because a common requirement is the employee’s waiver of rights to sue the employer. An employer may require that an employee sign a mandatory arbitration agreement as a condition of hiring or continued employment. Sometimes, this agreement is negotiable, but most of the time it is a “take it or leave it” proposition.

Generally, arbitration agreements are treated as legal and enforceable contracts, but this is not always the case. For instance, in the event that an arbitration agreement is deemed to be insufficiently specific, New Jersey courts have determined that the agreement cannot be enforced. Similarly, if an employee is not given notice that an arbitration agreement applies to the terms of employment, or if the employee is coerced or misled when signing an arbitration agreement, the agreement might be unenforceable.

Arbitration agreements and the arbitration process are important legal issues in the workplace. If you have been asked to consent to an arbitration agreement or are unsure of whether an arbitration agreement applies to your job, you may need legal advice. An experienced employment attorney can help you understand your rights and the exact implications of an arbitration agreement. If you develop a dispute with your employer, your attorney will be able to represent you during the arbitration process to help ensure that your rights are respected and upheld.