Arbitration Agreements Can Be Bad News for Employees – What You Need to Know
In my work representing injured workers, I am increasingly seeing a disturbing pattern of employers having employees sign arbitration agreements. If you have signed an employment contract in the past 15 years, chances are you have also signed away your rights to sue your employer if you get fired for bad reasons, have been discriminated against at work or have been seriously injured on the job. But more and more I am encountering these same agreements for at-will employees of all types.
Arbitration generally means that your lawsuit will not be heard by a court or a jury of your peers. Instead, your lawsuit will be decided by a third party, or sometimes a three-person panel, called an arbitrator. If you signed an arbitration agreement, the decision of the arbitrator is generally binding on both you and your employer.
Over the past couple decades, employers and companies have pushed more and more for arbitration in a variety of circumstances including consumer contracts, nursing home admissions and more recently employment. The reason for this is two-fold. For one, there is typically no appeal process in arbitration. Once the arbitrator decides, that’s it. But the bigger reason that the employers and/or companies favor arbitration is that most often the arbitrators have a pro-business leaning and companies tend to fare much better against litigants in arbitration. For people seriously injured at work, arbitration could potentially cost you millions of dollars in deserving compensation.
As mentioned, it has almost become common practice for some employers to include employment arbitration agreements inside of standard employment forms and documents. Because of this, many employees often sign these agreements without realizing the ramifications. Employees often do not know that they have signed away their rights to bring a lawsuit, because the employment arbitration agreement was included as a clause within an employment contract, or in an employee handbook.
That’s why it is critical to read through all the clauses in an employment contract before you sign it. If you get a document that says you have read and understand everything contained in an employee handbook, be sure to read and understand everything before singing. You can also ask your new employer if any of the documents you are signing contain an employment arbitration agreement.
If faced with an arbitration agreement, you will have to decide whether you are willing to sign away your rights. Keep in mind that your employer may rescind your job offer if you refuse to sign the arbitration agreement. Even at-will employees can potentially be fired for refusing to sign. But consider your bargaining power as well. If a certain employer has been courting you for months, they may be willing to give up or modify the scope of the arbitration agreement.
If you feel concerned about an overly-broad or restrictive arbitration agreement, you may want to speak with an experienced attorney before attempting to negotiate.
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