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Dealing with a fired employee who signed an arbitration agreement

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in Employee Benefits Program,Human Resources

Q. All of our applicants sign an arbitration agreement. Recently, for the first time, an employee we fired (he had signed the agreement) had a lawyer send us a letter complaining about his termination. Can we use the agreement to prevent the employee from filing a claim for unemployment benefits or a charge of discrimination?

Courts will enforce a properly drafted arbitration provision to require arbitration of a dispute that would otherwise be subject to a lawsuit. However, to use arbitration clauses as a way to avoid court litigation, the employer must typically be willing to pay all (or at least most) of the fees of the arbitrator.

Also, arbitration agreements typically cannot be used to prevent someone from pursuing administrative—as opposed to judicial—relief. Therefore, the employee would still be able to file a claim for unemployment benefits or a charge of discrimination.  

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