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Require staff to arbitrate disputes; court upholds ‘partially legal’ pact

by on
in Employment Law,Human Resources

Don't be leery of requiring employees to sign mandatory arbitration agreements. As the following ruling shows, even if a court disagrees with part of your agreement, it could still allow you to keep the deal intact after carving out the "bad" part of the pact.

Recent case: An employee sued for age bias, but her company's arbitration agreement bound her to settle the dispute in out-of-court arbitration. She claimed the arbitration pact should be ignored because it illegally required her to split the arbitration fees.

The court ruled for the company, keeping the case in arbitration. Reason: The fee issue composed only one part of the arbitration agreement and it could be removed without rendering the whole agreement void. Said the court: "You don't cut down the trunk of a tree because some of its branches are sickly." (Spinetti v. Service Corporation International, No. 01-4415, 3rd Cir., 2003)

Bottom line: Employers favor arbitration because it lets you resolve employee disputes much quicker and cheaper than fighting it out in court. The Supreme Court gave the green light to mandatory arbitration two years ago, but courts continue to toss out mandatory arbitration agreements that aren't written correctly. For a free guide on arbitration, go to the American Arbitration Association's site, www.adr.org, and click on ADR Guides.

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