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With arbitration under attack, consider right-to-jury-trial waivers

by on
in Employment Law,Hiring,Human Resources

With the enactment of the Franken Amendment (§8116) to the recently adopted Defense Appropriations Act for FY 2010, Congress and the Obama administration have begun an assault on employers’ use of mandatory arbitration as an alternative to court trials for resolving workplace disputes and claims.

This amendment prohibits companies from being awarded federal defense contracts worth more than $1 million if they require arbitration to resolve certain workplace claims.

The Department of Defense has quoted the amendment’s specific language in recent contract requirements. Prospective contractors must agree not to include or enforce any existing provision for mandatory arbitration for the following matters:

[A]ny claim under Title VII of the Civil Rights Act of 1964 or any tort related to or arising out of sexual assault or harassment, including assault and battery, intentional infliction of emotional distress, false imprisonment, or negligent hiring, supervision, or retention.

The Franken Amendment is just the first salvo.

Next on the anti-arbitration legislative agenda for Congress’ consideration this year is the Arbitration Fairness Act, which would ban the practice of making an agreement for arbitration of employment disputes and lawsuits.

What can employers do?

Employers have been asking whether other alternatives to jury trials will exist in the absence of arbitration.

One alternative that companies can consider is entering into waivers of civil jury trials with their employees. Waivers would have employment-related claims heard in a “bench trial”—one in which the judge alone decides the case.

While there is a right to a jury trial in civil cases under Florida law, that right can be expressly waived through a written contract. Both state and federal courts have found such waivers to be valid and enforceable. This waiver, however, must be made knowingly and voluntarily.

Florida courts have found these waivers valid and have upheld them in cases involving contracts and transactions such as mortgages, banking agreements, leases and landlord-tenant agreements. Waivers of civil jury trials in the employment arena have also been successfully sustained.

Waiver elements

Employment contracts for waiving the right to a jury trial in civil cases, which courts have held to be valid and enforceable, have these common traits:

  • Generally, the waiver should be a separate written contract. However, if it is part of a larger employment contract, it should be either a separate document or addendum to the contract, or presented as a distinct, stand-alone section on a separate page of the contract (usually the last page). In either case, the waiver’s terms must be conspicuous—not in fine print, but with a font the same size or larger than the contract’s font. In addition to signing the contract, both the employer and the employee should sign and date the addendum or the separate page that contains the waiver provision.
  • The waiver should be signed by both parties. Although waivers have been enforced against an employee when the employer had failed or forgotten to sign it, it is risky and adds to the expense of litigation not to have both signatures.
  • The scope of the particular claims to which the waiver applies should be written in clear, plain and unambiguous language.
  • The waiver should contain acknowledgments by the employer and employee (1) that they have read, know and understand the terms of the waiver of the jury trial right, and (2) that they are voluntarily waiving the right.
  • The waiver should provide sufficient “consideration”—that is, something of value that each side gains by signing. Examples: mutual waiver of each party’s right to jury trial, initial or continued employment and acknowledgment that the jury trial waiver is a material inducement for each of the parties.

Seek legal help

A waiver of the right to a civil jury trial has many legal ramifications.

If you want to explore using a waiver, seek legal advice from your employment lawyer. He or she can help you develop and draft the necessary papers and procedures before implementing any waivers.

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