Employers are responsible for providing proper channels for workers to bring up workplace injustices. Due to changing legal landscapes in recent years, including reinterpretations of the Federal Arbitration Act, employers now carry out mandatory arbitration clauses in employment contracts.
Unlike formal court hearings, arbitration is an alternative dispute resolution that offers a private, time-saving and cost-efficient way to settle disputes between companies and their workers. As much as it presents ease and convenience, its downsides can help both parties make informed decisions.
Think before you sign
Arbitration clauses have a neutral third party, usually a retired judge or lawyer, who hears any employment-related dispute. The arbitrator makes a binding decision as per the state’s arbitration laws, like Michigan’s Uniform Arbitration Act. However, including such terms in employment contracts has drawbacks caused by imbalanced procedures.
- Unsuspecting employees: Employees sign their hiring contracts without being aware that they cannot take the company to court because their employers embed the agreement in piles of paperwork.
- Unequal access to evidence: Employers have the upper hand in needed proof, while employees have a more challenging time requesting supporting files for their cases.
- Lack of empathy: The decision solely lies on an arbitrator’s fairness rather than a jury usually inclined to feel for employees’ plights.
- Lack of transparency: Unlike public court hearings, arbitration is a private court system. This method is a common approach for companies to protect their reputation.
- Not subject to appeal: Most cases tend to be final. Trying to appeal for a higher court ruling may prove futile.
As obligatory arbitration clauses gain momentum, so does the opposing side seeking to abolish them. The #MeToo campaign points out employers use arbitration hearings at closed doors to hide sexual harassment claims. Thus, it would be wise if employers pay close attention to this growing public sentiment and devise a plan for how to address it properly. Also, legislators are on the lookout to create some changes in policy to curb the use of forced arbitration.
Mandatory arbitration clauses provide a private ground for employers and workers to resolve conflicts. The ground rules must be clear to both sides before signing and agreeing to a fast and fair outcome. Should you feel pressured into signing, you can always pursue a legal resource to open the discussion for a possible course of action.