Most employment agreements contain provisions which require all disputes arising out of your employment to be resolved through arbitration: (Arbitration: a way to resolve a dispute outside of court. It’s an alternative to litigation that’s often faster and less expensive.)
Arbitration is usually found toward the end of the contract in small print using language that is unfamiliar and perhaps meaningless to you. People usually think that if there is a problem with my job, I’ll just go to a lawyer, and he’ll handle it for me. Yes, there is always that alternative. But the question is, what rights have you given up when you agree to resolve all your employment-related disputes in arbitration? The answer to that question is the same as the answer to why employers prefer arbitration. It’s because you have given up valuable rights in exchange for your compensation package. Sit on that for a moment.
Arbitration Over Litigation; Why Employers Prefer It & Why You Should Be Wary
First and perhaps most importantly, arbitration prevents the possibility of a runaway jury award. In a court action, your case is decided by a jury of your peers, meaning regular people, not judges. In arbitration, your case is decided by a single arbitrator who is usually a retired judge or a professional arbitrator who does nothing but arbitration. In either case, an arbitrator is not going to be as swayed by emotion as a jury might be.
For example, if you are fired from your job because you were the victim of age discrimination, you can be forced to bring that claim in arbitration. While a jury might find that the facts of your case are such that a very large award is appropriate because, say, you were abused because of your age causing the jurors to feel a certain outrage, an arbitrator is supposed to limit or even ignore any such feelings and issue an award dispassionately, without regard to emotion. This gives the employer an advantage in that the award is virtually guaranteed to be lower than a jury might issue.
However, an employee cannot be forced to arbitrate a sexual harassment claim regardless of what the employment agreement provides. The federal Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act (“EFFA”) provides that pre-dispute arbitration agreements are not enforceable for cases involving sexual harassment disputes. This means that if an employee elects, they cannot be forced into arbitration for sexual harassment claims, and this applies to cases brought under both federal and state law. Other than sexual harassment, you can be forced to arbitrate a discrimination claim. The Federal Arbitration Act (“FAA”) generally requires the enforcement of arbitration agreements, and New York law cannot exempt state law discrimination claims from mandatory arbitration if it conflicts with the FAA. Therefore, non-sexual discrimination claims can still be subject to mandatory arbitration under the FAA, despite New York’s attempt to exempt them.
If your employment agreement provides that you can only be fired for “just cause” after a hearing before an arbitrator, consider yourself lucky, because you at least have the opportunity to a fair and impartial hearing before someone who is selected by mutual agreement of the parties. Such arbitrations are common in public sector labor agreements, but not so common in the private sector absent the existence of a collective bargaining agreement.
If you find yourself in a situation where arbitration might be relevant to your employment, you should consult with experienced counsel before either signing an agreement requiring arbitration or seeking arbitration of an employment related dispute.
JCarbonaro Law has years of experience in arbitration and litigation of all types of employment and labor related matters. Reach out to me today if you’re in need of representation or consultation.
