Many employers have adopted a policy requiring their employees to arbitrate their employment related claims rather than litigate those claims in court. A policy of this type has a number of advantages. Arbitration is a less formal procedure and, therefore, is less expensive than trying a case in court. And, because there is no jury to play to in an arbitration proceeding, many plaintiff’s lawyers will not take a case that must be tried in arbitration. Adopting an arbitration policy, however, requires strict adherence to the guidelines that have been established by courts over time.

The Federal Arbitration Act (“FAA”) provides that written arbitration agreements are valid, irrevocable and enforceable. It provides that any action brought in district courts must be stayed when the dispute is subject to arbitration and allows courts to compel arbitration when one of the parties refuses to comply with the arbitration agreement. There is, however, no presumption that the parties agreed to arbitrate, so the employer must prove that there is an enforceable agreement to arbitrate.

Even when the employer and employee have reduced their agreement to arbitrate employment claims to writing signed by both, there are certain provisions, which if included in the written agreement, will make the agreement unenforceable. For example, a mandatory arbitration agreement which requires an employee to pay a portion of the arbitrator’s fees has been repeatedly found by courts to be unenforceable. Courts have reasoned that an employee may not be able to afford a portion of the arbitration costs. Such a requirement, therefore, denies an employee an accessible forum in which the employee can resolve his statutory rights.

If you want to learn more about mandatory arbitration agreements, attend our spring workshop. If you already have a mandatory arbitration policy and need a check up, give us a call.

By Rebecca M. Fowler, rfowler@dsda.com