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Do you use an arbitration clause? Make sure you can prove employees agreed

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in Employment Law,Human Resources

Employers that use arbitration clauses can often get lawsuits sent to an arbitrator for faster and less expensive resolution—but only if they are prepared to prove that their employees agreed to arbitration.

That generally means getting their signatures on an acknowledgment document or, if you provide the agreement electronically, tracking that they clicked through and agreed to the terms.

Here’s why that proof is so crucial:
Often, more than one employee with similar complaints will sue and a court will consolidate the cases. If you can prove that only some agreed to arbitration, those cases may avoid a federal trial. But the other employees, whose signatures or click-throughs you cannot document, will get their day in court. That’s an expensive proposition.

Recent case: Juan Mendez and many other employees of Fluor, a construction company, sued alleging discrimination and retaliation for complaining about discrimination. The company could produce the signatures of eight employees on arbitration agreements, but could not show the court that the others had signed a similar agreement.

The 3rd Circuit Court of Appeals said that the eight who signed would have their cases arbitrated, but the remaining employees were entitled to a federal court trial on their complaints. (Mendez, et al., v. Fluor Corporation, No. 07-4053, 3rd Cir., 2008)

Final note: Do you know where those arbitration acknowledgments are? Now is a good time to check.

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