You can require employees to sign agreements to arbitrate employment disputes — Business Management Daily: Free Reports on Human Resources, Employment Law, Office Management, Office Communication, Office Technology and Small Business Tax Business Management Daily

You can require employees to sign agreements to arbitrate employment disputes

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Good news for employers: A federal court concluded that New Jersey contract law does allow employers to require employees to arbitrate most employment-related complaints.

Plus, if an arbitration agreement contains terms that a court finds invalid, the court may throw those provisions out and still enforce the rest of the agreement.

Recent case: Anthony Contorno sued his former employer, alleging overtime violations. But when Contorno accepted his position, he signed an arbitration agreement that required him to arbitrate any employment-related claims rather than sue in federal court. He signed the agreement, understanding it was required.

The former employer asked the court to send the case to arbitration with Contorno paying half the cost.

The federal court concluded that New Jersey contract law allows arbitration agreements even if they are mandatory. But the court did say that Contorno wouldn’t have to pay his share of the cost—it said that section was “unconscionable” since the anticipated cost was more than his potential overtime claim. Instead, the court tossed out that section of the agreement and upheld the rest. (Contorno v. Wiline Networks, No. 07-5865, DC NJ, 2008)

Advice: Have your attorney review any language in your arbitration agreements and suggest the wording most likely to survive a federal court challenge.

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