Arbitration Agreements And Employment: What You Need To Know
In recent years, arbitration agreements have become increasingly common in employment contracts. These agreements require both the employer and the employee to settle any legal disputes that may arise through arbitration rather than through the traditional court system. While arbitration can be a useful tool for resolving disputes, there are some important factors to consider before agreeing to an arbitration clause in your employment contract.
What Is Arbitration?
Arbitration is a process that involves a neutral third party, known as an arbitrator, who hears both sides of a dispute and makes a final decision. Arbitration can be faster and less expensive than going to court, and it can also be more flexible, as the parties can agree to certain rules and procedures that are not typically available in court.
Arbitration Agreements and Employment Contracts
Many employers include arbitration agreements in their employment contracts as a way to avoid costly and time-consuming lawsuits. These agreements are often presented to employees as a mandatory requirement for employment, and employees may not be able to negotiate the terms.
One of the most significant implications of signing an arbitration agreement is that it typically waives the right to a jury trial. This means that if a dispute arises between the employer and the employee, the dispute will be resolved through arbitration and not through the court system.
Advantages of Arbitration Agreements
There are some advantages to arbitration agreements that may be attractive to both employers and employees. These can include:
– Lower costs: Arbitration can be less expensive than going to court, which can save both parties money.
– Confidentiality: Arbitration proceedings are usually private, unlike court proceedings, which are often public.
– Faster resolution: Arbitration can be faster than going to court, which can reduce the time and stress associated with legal disputes.
– More flexibility: Arbitration allows the parties to design their own rules and procedures, which can be useful in complex cases.
Disadvantages of Arbitration Agreements
While there are some advantages to arbitration agreements, there are also some disadvantages to consider. These can include:
– Limited appeal options: Arbitration decisions are typically final and binding, meaning there is little opportunity for appeal.
– Limited discovery: The discovery process in arbitration is often more limited than in court, which can make it more difficult to gather evidence.
– Limited damages: The damages that can be awarded in arbitration are often less than what can be awarded in court, which can make it less attractive to employees who have been wronged.
– Potential bias: Some employees may be concerned about bias in the arbitration process, as the arbitrator is often chosen by the employer and may have a financial incentive to rule in their favor.
Conclusion
Arbitration agreements can be a useful tool for resolving disputes in the workplace, but there are some important factors to consider before agreeing to such an arrangement. It is important to carefully review the terms of any arbitration agreement and consider the advantages and disadvantages of arbitration before making a decision. If you have any questions or concerns about arbitration agreements and employment, it may be helpful to consult with an experienced employment attorney who can provide guidance and advice.