Arbitration agreements are supposed to save money, not create additional legal expenses. By keeping employment disputes out of court, dispute resolution is supposed to be quick, fair and not subject to the whims of a jury.
But if you aren’t careful, arbitration agreements can leave your company paying more, not less. That can happen when employees file a federal lawsuit regardless of an agreement requiring arbitration. Then the court has to decide whether the arbitration agreement is valid.
To make quick work of litigation, be prepared to show there is no doubt that employees signed the agreement. Give a copy to every employee who signs, and remind them regularly that they are bound by the agreement.
Recent case: Joseph Ernest claimed his Colorado employer refused to re-employ him after a stint of military service in Iraq. He filed a federal lawsuit alleging violations of the Uniformed Services Employment and Reemployment Rights Act (USERRA). That’s when his former employer pulled out an arbitration agreement Ernest had supposedly signed. The employer asked the federal court to dismiss the case and send it to arbitration.
The problem was that Ernest claimed he had no recollection of ever signing an arbitration agreement. The court refused to simply dismiss the case and instead ordered discovery. Now the employer will have to pay legal fees and lose time proving that the signature on the agreement is genuine and valid. Had it provided a copy and regular reminders that employees were bound by the arbitration agreement, chances are the court would have dismissed the case. (Ernest v. Lockheed Martin Corporation, No. 07-CV-02038, DC CO, 2008)
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