THE HIDDEN CATCH:  MANDATORY ARBITRATION PROVISIONS IN EMPLOYMENT CONTRACTS

As an employment lawyer I am always saddened by the many clients who come to me and have no idea that, as a condition to their employment, they have signed away their right to remedy employment-related grievances in court.  Equally as sad are those employees who knew what they were signing but felt as if they had to in order to obtain work.

Many employment contracts these days contain mandatory arbitration clauses.  These are clauses or agreements often included in pre-hire paperwork and often overlooked by employees who are happy to be obtaining a new job and just sign whatever is put in front of them.  But these clauses, which require an employee to sign away their right to pursue any claims arising out of their employment in federal or state court and instead arbitrate those claims, are debilitating to employees’ rights.  Many employers make the signing of these agreements a condition to employment and, thus, employees are left with a Hobson’s choice:  sign the agreement and risk losing important remedial avenues should something go wrong or don’t sign it and don’t get the job.  Most employees, for obvious reasons, take the risk and sign the agreements.  Unfortunately, except for in limited circumstances, courts routinely uphold these agreements as bargained for exchanges between and employee and employer.  Despite what the courts have been holding, because employment is hinged upon the signing of these agreements, the bargaining power between employee and employee is simply not equal and not at all fair.

There is a multitude of problems with arbitration.  In arbitration, there are no juries and, at times and within the arbitrators’ discretion, discovery can be quite limited.  Moreover, concern has been raised, including by the National Employment Lawyers Association, that arbitrators have a built-in conflicts of interest because they are hired by employers and generally want to obtain repeat business from those employers.
The Arbitration Fairness Act (AFA), S. 1782 and H.R. 3010, aims at correcting this problem.  The Act would make mandatory arbitration clauses in employment, consumer, and franchise contracts unenforceable.  Early support for this bill was strong across both lines but, of course, it has not yet been passed. 
I would suggest that you contact your Senators and Representative to ask them to become cosponsors or supports of the AFA.

Kristin Case
The Case Law Firm, LLC.
www.thecaselawfirm.com