There’s good news for New Jersey employers that use arbitration agreements to keep workplace disagreements out of court.
Courts often find arbitration agreements valid, even if the employee who signed it was in a take-it-or-leave-it position. What’s more, courts won’t toss out an agreement just because a small section may be invalid. Instead, they’ll strike the invalid parts and leave the rest intact.
Recent case: Thomas Pyo, who is of Korean national origin, went to work for Wicked Fashions. He sued, claiming only Korean employees were forced to work overtime.
But on his first day on the job, Pyo had signed an arbitration agreement. In it, he agreed to take all claims of any kind to arbitration, start the arbitration process within one year of the event in question, limit the amount of discovery, give up punitive damages, pay arbitration costs and forgo attorneys’ fees if he won.
When Wicked Fashions asked a court to send the case to arbitration, Pyo argued that all those limitations made the entire agreement invalid.
The court said the limitation on punitive damages was invalid, but upheld the rest. For example, it said that Pyo’s argument that the entire agreement was unfair because he was heavily indebted by student loans and had no choice but to sign was not good enough to show he was under duress. (Pyo v. Wicked Fashions, No. 09-2422, DC NJ, 2010)
Note: Work with your attorney to craft arbitration agreements.