Mandatory Arbitration Clauses and Employment Disputes

24 Feb Mandatory Arbitration Clauses and Employment Disputes

Mandatory arbitration clauses, especially since 2011, have become more and more common in the employment context. I’ve talked about this in some of my other blog posts about how much I disdain mandatory arbitration clauses and unfortunately, there are many problems with mandatory arbitration, especially in the employment context.

The biggest issue among many is that employers with arbitration clauses will probably have to participate in multiple arbitrations, and the arbitrators are essentially private judges. There is the potential for the arbitrators to rule in favor of the employer in order to get repeat business (called “the repeat player effect”).

Individual employees typically don’t have to go to arbitration more than once in their lifetime, if ever, so there is no potential incentive for an arbitrator to rule in an employee’s favor.

Another problem with mandatory arbitration, is that it could, but not necessarily will, have an effect on the value of the case. If an employee is presented with an arbitration agreement, they should think long and hard, and even think about talking to a lawyer before signing it. Not all employers, however, will give you the option of signing it or not signing it. Some do, but a lot of them don’t. Everyone should keep in mind that if they sign an arbitration agreement, they are most likely going to be forced to go to arbitration as opposed to having their day in court in front of a jury. That can affect the value of their case.

If you don’t have a choice in the matter, you can either agree to the arbitration agreements, or you will have to find another job. That is not an easy decision for most people to make, but, unfortunately, it is becoming more and more commonplace.

One mitigating factor about arbitration in the employment context is that if the employer requires the employee to go to arbitration, the employer has to pay for the arbitrator fees. The employee only has to pay for what they would normally pay if they were in a regular court of law. Frankly, the arbitrator fees can cost far more than any cost associated with filing a case in a court of law. So, sometimes employers will decide that they don’t want to enforce the arbitration agreement because it would cost a lot of money. That’s one advantage that an employee who is forced to sign an arbitration agreement may have in their back pocket.

Arbitration agreements have to follow certain procedural and substantive requirements. If the agreements are procedurally or substantively unconscionable to a certain extent, then a court may decide that the arbitration agreement is not enforceable. If an employee has a legal claim against their employer, and there is an arbitration agreement, it would be very important to speak with an employment attorney to evaluate whether the arbitration agreement could be found unenforceable in court so that the employee can have the chance to bring their claims to a jury of their peers as opposed to a private judge.

If you are presented with an arbitration agreement by your employer, or if you have already signed an arbitration agreement and have a legal claim against your employer, contact an employment lawyer today at the Khadder Law Firm for a free initial consultation.