Arbitration in Employment Contracts

Arbitration in Employment Contracts: What You Need to Know

When employees sign employment contracts, many of those agreements include a clause mandating arbitration for any disputes that may arise between employer and employee. Arbitration can be a contentious issue, with both supporters and critics. Understanding what arbitration is, and how it works, can help you make an informed decision when signing an employment contract.

What is Arbitration?

Arbitration is a process that allows parties in a dispute to avoid going to court. Instead, they agree to have an arbitrator or panel of arbitrators review the evidence and make a binding decision. The arbitrator`s decision is final and usually cannot be appealed.

In employment contracts, arbitration clauses typically require that any disputes arising from the employment relationship be resolved through arbitration. This means that if an employee has a legal complaint against their employer, they cannot bring that complaint to court. Instead, they must participate in an arbitration process.

Pros and Cons of Arbitration

There are several pros to arbitration, according to its supporters. One is speed; arbitration can be faster than going to court, saving time and money for everyone involved. Another is privacy; arbitration proceedings are typically kept confidential, meaning sensitive information won`t be aired in public. Supporters also argue that arbitration can be less biased than court proceedings, as the parties get to choose who the arbitrator is.

Critics, on the other hand, argue that arbitration can be tainted by conflicts of interest. As the parties choose the arbitrator, it`s possible that one or both of them may choose someone who has a bias towards their side. Critics also argue that arbitration can be more expensive for the employee than going to court, as the employee may have to pay for their own legal representation. Finally, critics point out that arbitration clauses can sometimes be used to limit an employee`s ability to pursue legal action against their employer, as they are forced to sign away their right to sue in court.

What Should You Do?

If you`re considering a job offer that includes an arbitration clause, there are a few things to consider. First, read the clause carefully and make sure you understand what it means. If you`re unsure, seek legal advice. Second, consider the pros and cons; do you value speed and privacy over the ability to sue in court? Third, consider negotiating the clause before you sign, asking for changes that will make it more palatable to you.

Ultimately, the decision to agree to an arbitration clause is up to you. But understanding what it is and how it works can help you make an informed choice that protects your rights as an employee.