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Make sure your arbitration agreement is valid in Ohio

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in Employment Law,Human Resources

Arbitrating employment disputes in lieu of going to federal court can save your organization time and money if the agreement sticks. But just one mistake in drafting and implementing the agreement could end up costing you more, not less.

The danger is that an employee’s attorney will go to federal court to have the agreement invalidated, adding an extra legal step to the process.

So, make sure your arbitration agreement meets Ohio contract requirements. Follow these do’s and don’ts to comply:

  • Don’t bury the agreement deep in the employee handbook.
  • Do provide employees with a separate copy and have them acknowledge receipt.
  • Don’t include a term that allows you to make changes whenever you deem appropriate.
  • Do provide employees an opt-out option by setting a deadline for them to reject the arbitration agreement.

Recent case: Randolph Legair worked at Circuit City for several years. When the electronics retailer introduced an arbitration agreement, it gave current Ohio employees the opportunity to “opt out” within 30 days of receiving a copy.

Legair signed an acknowledgment that he’d received a copy and knew he had 30 days to notify Circuit City in writing if he didn’t want to arbitrate employment disputes. But he didn’t opt out.

When Circuit City fired him, he asked a federal court to ignore the arbitration agreement. But the court refused. It said his employer had followed Ohio contract law, and Legair had missed his chance to opt out when he didn’t return the form. (Legair v. Circuit City Stores, No. 05-4179, 6th Cir., 2007)  

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