Understanding Employment Arbitration

Understanding Employment Arbitration

Many modern employers who use employment contracts include employment arbitration agreements in their contract terms. It is important for people to understand what these agreements mean and what to do in the event a dispute arises. These agreements have become increasingly popular in the last 15 years, and when people sign them, they have agreed to not sue their employers if they have were fired for discriminatory or otherwise poor reasons. Arbitration agreements mean that disputes are instead handled in arbitration, which is an alternative to pursuing legal remedies in court. Here is what the attorneys at Swartz Swidler believe that you should know about arbitrating disputes with your employer.

The disadvantages of arbitration

In order to understand the disadvantages of arbitration, you must first understand what arbitration is. Complaints that go through arbitration are not heard by a jury or a court. Instead, arbitration involves a neutral third party who is called an arbitrator. The arbitrator is hired to hear the case and render a decision. Because people sign contracts agreeing to arbitration, the arbitrator’s decision is normally binding on both the employee and the employer.

Because the decision is final, you will normally not be able to appeal it to a higher court. It will also be heard by only one person rather than by a jury of your peers. In general, arbitrators are fair and follow the law. Employees still sometimes prefer to have juries hear their cases because juries may be more sympathetic.

Arbitration is faster than litigation, which leads to a second disadvantage. Because of the speed of the process leading up to the arbitration hearing, the parties generally get to request fewer documents and less evidence from each other. In most cases, this hurts employees because employers have greater access to the documents and evidence that are needed for the dispute.

Advantages of arbitration

Arbitration hearings are not as formal as are court trials. They are often less expensive and involve fewer costs for documents preparation and filing. Because they are informal, arbitrations are normally much faster and more efficient. They may reach a resolution within a few weeks while court litigation may not be completed for more than a year.

The importance of taking care before signing documents

Because employment arbitration agreements have become commonplace, they are often included within standard employment documents and forms. Many employees sign them without understanding that they have done so while they are completing their employment paperwork. The best way to protect your legal interests is to make certain to read everything that is presented to you before you sign. This includes reading through the clauses of employment contracts. If you are handed a document that states that you have read and that you understand everything that is contained in a handbook, you need to make certain that you have read it and that you do understand it before you sign the document.

Be careful if you are thinking about not signing

It is important for you to understand that an employer may rescind job offers if employees refuse to sign arbitration agreements. At-will employees may also be fired for refusing to sign such agreements. This does not mean that you do not have bargaining power, especially if your employer has been attempting to recruit you for months. You can try to get such an employer to agree to get rid of the arbitration agreement. You might also agree to sign it if certain modifications are made.

Fair arbitration agreements

In most cases, employers will not be willing to give up their arbitration agreements because the agreements are in the employers’ best interests. It still may be possible for you to negotiate its terms to make the agreement fairer to you. If the arbitration agreement is too broad or restrictive, you might want to speak with an attorney at Swartz Swidler for help with negotiating it. Our attorneys are often able to spot terms that should be modified. Here are some areas you might want to look for when you try to negotiate:

1. The arbitrator

It is important for you to have the same amount of control as your employer over selecting the arbitrator who will hear any dispute that arises. You can do this by including a provision that states that both you and your employer is allowed to dismiss one arbitrator without giving reasons for doing so.

2. Disclosure of information about conflicts of interest

In some cases, arbitrators have interests in allowing the employer win. It is important that you include a provision that allows the arbitrator to disclose the information that could relate to any interest that he or she has in the outcome of a dispute. It is important to know if an arbitrator has a bias so that he or she may be rejected by you or your employer.

3. Costs

Since your employer is the party who wants the arbitration agreement, make certain that it is the party that will be responsible for paying the costs of arbitration.

4. Waiver of remedies

It is important that you do not agree to waive certain legal remedies that may otherwise be available to you. You should make certain that your agreement specifies that you are allowed to seek damages for emotional distress as well as punitive damages.

5. Right to an attorney

Make certain that you do not waive your right to an attorney in arbitration. If your dispute had headed to court, you would likely have had the ability to retain an attorney to help you. Having an attorney from Swartz Swidler help you to prepare for and present your case at arbitration may make a difference in the outcome.

Discrimination and additional agency remedies

Arbitration agreements only apply to you and your employer. This means that you may still have the right to sue your employer for some reasons. One example includes filing discrimination charges with the Equal Employment Opportunity Commission. As a federal agency, it has the ability to sue your employer for you because it is not bound by the arbitration agreement between you and your employer.

Employment arbitration agreements can be tricky, and it is important that you understand your rights. If you would like to review your proposed agreement with an attorney at Swartz Swidler, contact us today to schedule an appointment.