Forced Arbitration Agreements Can Hurt an Employee in the End

Aug 11 2017

In the 2001 case of Circuit City Stores, Inc. v. Adams, the United States Supreme Court concluded that the federal law governing arbitration can be applied to employment contracts. The decision allowed employers to require employees who had signed arbitration agreements to resolve their subsequent employment disputes by arbitration, thus precluding the employees from suing their employers in court.

Since then, more and more employers are forcing their employees to sign arbitration agreements. Although the concept of arbitration is sound, it can hurt an employee’s chances of having a fair resolution of his claim against an employer.

What is an Arbitration Agreement?

Arbitration is considered an alternative form of dispute resolution. Instead of filing a lawsuit and going to court, the two parties present their cases before a neutral third party, made up of either a single arbitrator or a panel of (typically three) arbitrators. At the arbitration hearing, each party can present evidence to support or defend against the claim. The arbitrator or panel will then make a ruling.

Arbitration is considered to be more efficient and less costly than filing a lawsuit. It is usually conducted in a less formal setting than a courtroom, which can calm any nerves an employee may have about the case.

But there are drawbacks to arbitration agreements, especially if the agreement was forced upon the employee. Forced arbitration deprives the employee of his right to have his legal claim heard in a court of law where a jury can decide his case. Unlike a lawsuit, arbitration rulings are almost always final, which limits opportunities for review by a judge.

In addition, it can be difficult for the employee to obtain the evidence he needs to prove his claim if the evidence is in the employer’s possession. And if an employee does win in arbitration, the agreement can limit the damages he can recover. In an arbitration hearing, only the arbitrator decides the outcome of the case.

Arbitration Agreements and Discrimination

If you were subjected to discrimination or other unlawful conduct by your employer, you still have the option to file a complaint with the Equal Employment Opportunity Commission, even if you agreed to arbitration. If the EEOC feels you have been discriminated against, it can sue the employer in court on your behalf.

Can You Refuse to Sign an Arbitration Agreement?

If your employer makes your agreement to sign an arbitration agreement a condition of your employment and you refuse, what can happen? You could risk not being hired. For example, if a prospective employee refuses to sign, the employer could rescind an offer of employment. Or, since Connecticut is an “at-will” state, an employer might be able to terminate an employee for his refusal to sign.

Instead of simply refusing to sign a mandatory arbitration agreement, you may want to try and negotiate a better agreement. It’s best to consult with an attorney who is experienced with employment arbitrations to get the fairest agreement possible. Before signing any contract, contact the employment lawyers at Garrison, Levin-Epstein, Fitzgerald & Pirrotti, P.C.

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