Good news if you’ve ever wondered whether that arbitration clause you had your employees sign is valid. As long as certain conditions are met, employers can require employees to sign an arbitration agreement as a condition of employment.
The agreement must be specific and cannot require employees to waive any substantive rights under federal or state law. However, employees can waive the right to go to court to enforce those rights, as the following recent case shows.
Recent case: Myron Richardson worked for Universal Technical Institute (UTI) as a recruiter, and he signed an arbitration agreement when he came on board. The contract specified that Richardson gave up the right to bring a lawsuit alleging employment discrimination under the jurisdiction of the EEOC or an equivalent state agency. Instead, he agreed to allow an arbitrator to decide any case that might arise.
UTI discharged Richardson, and he filed a federal lawsuit alleging discrimination under Title VII of the Civil Rights Act and Michigan’s Elliott-Larsen Civil Rights Act. But the court tossed out his case and sent it to arbitration. This was legal because the agreement didn’t say he couldn’t bring a claim—it just said he couldn’t file a federal or state lawsuit. (Richardson v. Universal Technical Institute of Arizona, No. 1:06-CV-858, WD MI, 2007)
Final note: Make sure your arbitration agreements allow the arbitrator to award all remedies available under state and federal discrimination laws. Otherwise, the agreement may be tossed out.