WHY DOES YOUR EMPLOYMENT CONTRACT HAVE AN ARBITRATION CLAUSE

I doubt anyone has ever read the contract when purchasing a cell phone. If you have read your cell phone contract, you know there is an arbitration clause in the agreement which states that if you have any legal right against the cell phone company, you waive your right to sue them in state or federal court, and instead agree to arbitration in X State.

Interestingly, these are also appearing in employment contracts across the country.

Arbitration is system of dispute resolution, that does not involve a judge or jury. Rather, an arbitrator (usually a retired judge or lawyer) will hear limited evidence on both sides, and decide the matter. There is limited right to appeal, and the decision is binding.

There is a rumor out there that arbitration saves money on both sides. I have not found this to be true as arbitration associations charge parties extra fees not required in court. There is also a rumor that arbitration saves time. This may be true given the busy nature of our local state courts.

While I do not think arbitration agreements help plaintiffs in medical malpractice or personal injury cases, in an employment context, they don’t scare me as much.

If you have already signed an Arbitration clause in an employment context – don’t freak out. If you are being asked to, I would question it. Likely, the attorney put the clause in the contract and your employer may not even know why.

Lauren Ellerman

Lauren Ellerman

In 2011, Lauren Ellerman was named "Young Lawyer of the Year" by the Roanoke Bar Association for her work in the community. To speak with Lauren about your personal injury case, contact her at lellerman@frithlawfirm.com.