Arbitration Agreements in Employment: What You Need to Know

In recent years, arbitration agreements have become a common feature in employment contracts. These agreements have been a subject of much debate, with proponents touting their benefits in resolving disputes and detractors pointing out their potential drawbacks for employees. In this article, we will explore what arbitration agreements are, why they are used, and how they can impact employees.

What is an Arbitration Agreement?

An arbitration agreement is a contract between an employer and employee in which they agree to resolve any disputes that may arise from the employment relationship through arbitration rather than through litigation. In other words, instead of going to court, both parties agree to use a neutral third party called an arbitrator to resolve any conflicts.

Why are Arbitration Agreements Used?

Arbitration agreements are often used by employers as a way to avoid costly and time-consuming litigation. They also provide a more private way to resolve disputes, as arbitration proceedings are not open to the public. Additionally, arbitration can be less formal than litigation and can be completed more quickly.

How Can Arbitration Agreements Impact Employees?

One of the main concerns with arbitration agreements is that they can be seen as unfair to employees. This is because arbitration can limit an employee`s ability to bring a case to court and can also restrict their ability to join a class-action lawsuit. In a class-action lawsuit, multiple employees can join together to bring a claim against their employer. However, most arbitration agreements require employees to bring any claims on an individual basis, which can be more difficult and expensive.

Additionally, arbitration agreements can limit an employee`s ability to appeal a decision made by the arbitrator. In most cases, the decision made by the arbitrator is final and cannot be appealed, even if the decision is clearly unfair.

What Should You Do if Your Employer Asks You to Sign an Arbitration Agreement?

If your employer asks you to sign an arbitration agreement, it is important to carefully review the terms of the agreement and understand what you are agreeing to. If you have any questions or concerns, you should seek the advice of an experienced employment attorney. Additionally, you should consider the potential impact of signing the agreement on your ability to bring a claim against your employer in the future.

In conclusion, while arbitration agreements can provide benefits in resolving disputes, they can also limit an employee`s legal rights. If you are asked to sign an arbitration agreement, it is important to fully understand the terms and seek legal advice if necessary. Ultimately, the decision to sign or not to sign is up to each individual employee.