Scrutiny of arbitration agreements on the rise — Business Management Daily: Free Reports on Human Resources, Employment Law, Office Management, Office Communication, Office Technology and Small Business Tax Business Management Daily

Scrutiny of arbitration agreements on the rise

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If you require employees to sign arbitration agreements as a condition of employment, expect more questions from them.

Recent media attention—led by a New York Times series, “Arbitration Everywhere, Stacking the Deck of Justice”—has highlighted the disadvantages of arbitration for employees.

The series implied that employment arbitration heavily favors employers over employees, limiting potential remedies for alleged workplace wrongs, especially the right to file a class-action case.

While most employers prevail when the case ends up in arbitration, that interim step does add cost to the process.

Plus, sometimes judges conclude that the arbitration agreement doesn’t meet the state’s legal standards for creating a contract. In other jurisdictions, requiring employees to bring complaints within a few weeks or months after the alleged discriminatory action may be an invalid time limit.

What does this mean for employers? If you have or plan to introduce arbitration as the exclusive remedy for employee disputes, make sure the agreement will stick.

Each state has slightly different contract law provisions. One agreement may not pass muster in all jurisdictions you operate in. It’s crucial to have counsel review each agreement before you present it to workers. Also, regularly review your existing agreements for continued state contract law compliance.

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