The document discusses the enforceability of employment arbitration agreements, which are often included in employment contracts to mandate arbitration as the dispute resolution method. It highlights the advantages and disadvantages of arbitration for employees, including limited access to evidence and the finality of arbitration awards. Additionally, it outlines circumstances under which arbitration clauses may be deemed unenforceable and provides precautions for employers to ensure fair arbitration agreements.

1. Posted by
agreementsorg
September 6,
2019
Enforceability of Employment Arbitration Agreement
employmentarbitrationagreement.wordpress.com/2019/09/06/enforceability-of-employment-
arbitration-agreement
Most employers make their employees sign an employment contract when they hire
them. These employment contracts usually contain, among other terms, an arbitration
clause. This condition prevents an operator of suing the firm in court for wrongful
termination of profession, separation, alternatively any other violation under the
contract. It prescribes arbitration as the mode of dispute resolution. When employees
sign the employment contract, they agree to subject themselves to arbitration in state of
a conflict and not move to court.
The arbitration process
Following an arbitration method, an impartial party, known as the arbitrator, is
appointed. He hears both the parties and goes through all the evidence. After having
concluded, he gives his judgment, which is known as the arbitration award. The process
is less formal than court proceedings and less expensive. However, there are certain
drawbacks for the individual employee. Unlike in a court trial, the employee cannot get
all the files and documents that he may need to strengthen his case. It is the employer
who holds most of the information and may refuse to furnish appropriate documents.
Moreover, the judgment of the arbitrator is final in most cases and bottle be sued.
Hence, the employee signifies left with no choice but to accept it.
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2. When the arbitration clause will not be required
The Federal Arbitration Act favors enforcing arbitration clauses. Other states have
statutes favoring arbitration. With regards to arbitration clauses in employment
contracts, the United States Supreme Court has held them to be enforceable. Thus,
employees cannot bring class-action lawsuits against their employers. However, there
are certain circumstances when such an arbitration clause is not applicable.
When the arbitration agreement is unconscionable
Unconscionability can be procedural or substantive. However, an employee has to prove
both to render an arbitration clause in his employment agreement unenforceable.
Procedural unconscionability: It considers the circumstances under which the
contract was signed. For example, if the deal was impossible for the operator to
understand due to overly complicated language, or the arbitration requirement was
written in fine print, or the employee was rushed into signing the contract or signing the
contract was addressed a condition for him to get the job, it would lead
to procedural unconscionability.
Substantive unconscionably: It resembles into the substance (terms) of the contract
such as every scope of discovery under arbitration, the party who will bear the cost and
whether the proceedings will be confidential. Sometimes, if the government finds that
the national decree has to pay more for the arbitration process than he would have paid
for a lawsuit, it may render the adjustment clause unenforceable.
Precautions to be taken by the employer
To render the agreement clause in its employment contract free of any challenge, the
employer should keep in mind certain points:
Provide the arbitration agreement as a stand-alone agreement to the employee.
Sometimes, employers provide it in a directory and make the employee sign a
declaration that he agrees to all the terms of the handbook. Such a scenario can
give rise to claims that the employee was not aware that the arbitration clause was
covered in the handbook.
Employers should ensure that they are able to convey mutual approval for
arbitration. If the court feels that negotiations with respect to the arbitration clause
were one-sided, with the company dictating the terms, it may not enforce the
clause.
Management should agree to bear the cost of the arbitration process for all
employees. Exemptions may be made for high-level employees, though some
states in the US do not allow that. Asking the employees to pay for arbitration or
splitting expenses with them may lead to substantive unconscionability.
Drafting a fair arbitration agreement
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3. Since the employer has the upper hand in employment contracts, the employee can only
negotiate some of the terms. He needs to negotiate to get a fair arbitration agreement.
Any of the provisions that he can discuss are:
The employee should arrange for equal advantages to choose an arbitrator.
Considering the significance of the arbitrator in the entire process, he should be
selected by a process that is fair to both parties.
The employee can negotiate to require the arbitrator to disclose any information
that may link him to the employer. Any conflict of interest on the arbitrator’s part
will be prejudicial to the fairness of the arbitration agreement process.
The employer should explain to get all the remedies that he may have got in a
traditional lawsuit. For example, the company cannot, by way of the arbitration
agreement, prohibit the employee from getting scratches for mental stress.
The employer must not give up his right to engage a lawyer to represent him in the
arbitration.
A profession contract, by nature, is tilted in favor of the employer because it is the
party that drafts it. Many times, employees sign the agreement without giving it
much thought because they are excited to start a new job. Without the employee is
an experienced professional who joins the employer at a superior level, employees
frequently do not have enough bargaining power when it comes to employment
contracts. It is only in case of a dispute that they realize the implications of the
agreement and the arbitration clause contained therein. But, they should negotiate
for better and more balanced terms to make the deal fair.
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