Requiring employees to arbitrate most employment disputes can save your organization time and money—if you can get the agreement to stick. Courts look closely at the circumstances surrounding the agreement’s presentation. Sometimes they rule an agreement is so one-sided and unfair that they toss it out.
But if the applicant gets a chance to review the agreement while she can still turn down the job without much hassle, it will probably be binding.
Recent case: Alexye Yagoda took a job with Panera Bread as a retail manager. The company told her before she accepted the offer that she had to sign an arbitration agreement. She did. Later, when Yagoda sued Panera Bread for sex discrimination, the company asked the court to send the case to arbitration.
The court agreed after looking carefully at the circumstances surrounding Yagoda’s signing. Unlike other cases in which courts had invalidated such agreements, it said this one was valid. The court distinguished this case from one in which the agreement wasn’t presented until after the applicants had quit their old jobs, bought expensive equipment and were in situations where they had no reasonable choices. Yagoda could have turned down the job if she didn’t want to sign. (Yagoda v. Strong Corporation, No. 08-1901, DC NJ, 2008)
Advice: As soon as possible in the hiring process, explain that you will require an arbitration agreement. That way, applicants who don’t want to sign can halt the hiring process before they quit their jobs.
- Caution: Hiring applicant who signed noncompete spells trouble
- Do you rely too much on staff referrals? Beware legal risk
- Court: Applicants must apply first before they sue for hiring discrimination
- Read EEOC and PHRC complaints carefully to avoid surprise lawsuits later
- Hope arbitration can halt EEOC action? It won't