More and more often employers are including arbitration agreements as part of each employee’s on-boarding paperwork. You may not think much about signing this type of agreement or even understand what this agreement means. However, these agreements could affect your ability to pursue any potential legal claims you have against the Company/your employer in the future.
What is arbitration? Arbitration is a type of alternative dispute resolution. It is a system that is entirely separate from the US Court system. An arbitration agreement is a contract signed by two parties (for example, an employer and an employee) where each agrees that any dispute between them that arises from the employment will be heard by a private arbitrator, rather than in front of a judge or jury.
Arbitration agreements generally favor employers more than employees. Arbitrations typically prevent an employee from representing his/her/their fellow similarly situated workers who may have the same claims, and instead requires each employee to pursue their claims separately. Arbitration agreements also require an employee to give up their right to a jury trial. Arbitration also significantly limits the amount of discovery or information that an employer is required to provide if a dispute arises. Additionally, arbitration decisions may not generally be appealed, so you do not have much, if any recourse, if an arbitrator makes an unfavorable ruling on one of your claims.
If you are asked to sign some documents related to your employment, be sure to review everything carefully, as arbitration agreements can be easy to miss. These agreements sometimes also included provisions that allow the employee to “opt-out” of the arbitration agreement, so be sure to carefully read the full agreement to determine whether it is a condition of your employment, or if you have the option to continue your employment without agreeing to the arbitration procedure.
Are you an employee with questions about your rights?