How does an Employment Arbitration Agreement work?

Signing an Arbitration Agreement With Your Employer

What is an Employment Arbitration Agreement?

An employment arbitration agreement is a legal document signed by both an employer and employee that stipulates that any disputes arising from the employment relationship will be resolved through arbitration, which is a type of Alternative Dispute Resolution (ADR). In California, an arbitration agreement must specify the process through which a dispute will be resolved including the type of dispute it applies to, the method of arbitration chosen, and the applicable rules and procedures.

To clarify, an employment arbitration agreement is a contract between an employee and employer that sets out the procedures for resolving disputes through a formal dispute resolution process called Arbitration.

The agreement is typically signed as a condition of employment, prior to any dispute arising. However, an employer may require an employee to sign an arbitration agreement at any time during their employment.

What you need to know before signing an Arbitration Agreement

Benefits and drawbacks of signing an Arbitration Agreement

Is it beneficial for you?

Whether or not it is beneficial for employees depends on the particular circumstances. The benefit of signing an arbitration agreement is the quick resolution of any disputes without the need for a protracted, pricey lawsuit. However, the downside is that arbitration generally results in less favorable outcomes for employees and can limit their ability to appeal a decision or to have the dispute heard before a jury.

Arbitration can be less expensive and time-consuming than litigating a dispute in court, but some arbitration clauses can have some significant limitations on an employee’s ability to receive damages or other remedies.

An arbitration agreement generally requires the employee to waive their rights to file a lawsuit or to have their claims heard before a jury, and instead agree to submit their dispute to an arbitrator and abide by the arbitration award.

Moreover, in California, employment litigation attorneys usually charge a contingency fee. This means that an attorney will not charge a fee upfront, but instead will receive a percentage of the amount that they win in a settlement or judgment. The attorney’s fee is usually a percentage of the total amount recovered and will be taken out of the settlement or court award. The contingency fee makes a claim or lawsuit suitable and affordable for employees. This means that employees only need to pay the attorney’s fee if they win or settle the case, and makes it possible for those with limited funds to pursue a claim without needing to pay legal fees upfront.

For these reasons, employees should understand the terms of any arbitration agreement they are asked to sign and how it may affect their rights before signing it. It is important for employees to understand the agreement and all of its implications before signing.BENE

Read All Documents Carefully

Before starting a new job, be sure to read all documents carefully.

Employers often sneak arbitration agreements into other documents, like employment contracts, hiring letters, and employee handbooks. Reading all documents carefully is essential to ensure you understand what you’re agreeing to. Make sure you read every document before signing it to avoid accidentally agreeing to an arbitration agreement. Take your time to understand the terms and ask questions if you have any concerns.

Risks of Not Signing an Employment Arbitration Agreement

Refusing to sign an Employment Arbitration Agreement

Refusing to sign an arbitration agreement offered by your employer may put your job in jeopardy. Normally, employers can take back an offer of employment if the applicant refuses to sign the arbitration clause. Additionally, their ability to fire an at-will employee is also extended when said employee refuses to sign. However, you may be able to negotiate the terms of the agreement based on your value to the business. If you are particularly sought after or valued by the employer, they may be willing to accept your refusal of signing the employment arbitration agreement or may allow you to negotiate certain terms of the agreement to make it fairer to you.

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