Arbitration Agreements in Employment Contracts

Many employment contracts contain arbitration agreements. Often, a position of employment, job benefits, or the continuation of employment is made conditional upon the employee agreeing to arbitrate any future claims against the employer. This is known as forced arbitration. It is important to understand what arbitration is and what you are signing if you are being offered a contract that includes an arbitration clause.

Alternative Dispute Resolution

Arbitration is a form of alternative dispute resolution (ADR) – a way to resolve claims outside the public court system. The process involves bringing claims before a private arbitrator who is paid by one or both of the parties in the dispute. The arbitrator reviews the evidence presented and listens to what both parties have to say in the dispute before making a decision. Generally, these decisions are final and it is seldom that a court will review or overturn a decision reached in arbitration. The exception to this is if there is proof that the arbitration procedure was fraudulent, or the arbitrator was corrupt.

In arbitration, the rules of evidence and procedure are not the same as in public court and the process is less formal than a courtroom trial. Unlike a judge, the arbitrator is not bound by formal laws or any precedents already set in court. The arbitrator may use their own judgement of what is fair to reach a decision. A dispute that goes through arbitration also remains private, as opposed to one settled in court where the ruling is a matter of public record.

Arbitration has traditionally been used successfully to settle union or commercial disputes. Such disputes usually involve interpreting the terms of a contract and the arbitrators presiding are familiar with the industry players represented in the proceedings.

Forced Arbitration

As mentioned above, whenever an employee must sign something that says any future claims against the employer will be settled by arbitration, this is called forced arbitration. In essence, the employee is signing away the right to make a claim in the public court system using the laws governing that system, such as the right to discovery. In the arbitration process it may be difficult for an employee to gain access to information that would aid their case, as it is held by the employer. Additionally, in arbitration proceedings the employer often has much more influence than would be possible in a public courtroom. Finally, studies suggest that while arbitration is often promoted as a quicker, cheaper alternative to costly court battles, it is often cost prohibitive for employees and as such, they rarely file claims. For this reason, if you must sign a contract that contains a forced arbitration clause, it is advisable to have an experienced employment lawyer review it first so that you are clear about the legal implications of what you are signing.

Red Bank Employment Law Firm of McOmber McOmber & Luber, P.C. Provides Experienced Legal Counsel on Arbitration Agreements

No matter what your employment law needs may be, the Red Bank employment lawyers at McOmber McOmber & Luber, P.C. can provide you with skilled legal representation. If you have been presented with an arbitration agreement to sign as a condition of employment, we will be happy to review it with you and answer any questions you might have.

Call our Red Bank office at 732-842-6500, our Marlton office at 856-985-9800, our Newark office at 973-878-9040, or contact us at 888-396-0736 or online for a free consultation.