So, if employers are requiring employees to sign arbitration agreements, when and where does that usually happen? The most common time for an employer to ask employees to sign an arbitration agreement is when the employee is hired and filling out his or her initial employment paperwork. The arbitration agreement may be a separate form or it may even be a part of the employer handbook/manual. The language in the arbitration agreement can vary widely, but it will usually state that any disputes you have arising out of your employment will be resolved through arbitration.
Employees often do not understand the implications of signing an arbitration agreement and consider them to be just another standard form that must be signed before they can begin working. Unfortunately, signing an arbitration agreement can have a great impact on employees and their ability to bring a claim against their employer.
Briefly, arbitration is a form of private dispute resolution that is conducted by a privately paid arbitrator. Cases decided by arbitrators have many similarities to cases decided by a court, but some of the differences can by very important. First, in addition to any attorney fees and costs, the arbitrator must also be paid by either one or both of the parties. Without an arbitration agreement you can file a claim in the court system for a flat filing fee, but the parties do not pay for the cost of the judge. The arbitration agreement can specify which party pays the arbitrator and it is not uncommon for the losing party to be required to pay. Arbitrators in employment cases are often experienced attorneys with hourly rates of $300.00 per hour and higher. This can increase the cost and potential liability of bringing a claim by thousands of dollars. Next, discovery, the process by which the employer and employee exchange potential evidence in the case, may be much more limited in arbitration. This often disadvantages the employee, because the employer is usually the party with most of the evidence in their possession. Arbitration agreements give up the right to a jury and usually to any appeal of the binding decision rendered by the arbitrator. Finally, arbitration proceedings and awards are usually private and confidential, so an employer does not need to fear that their potentially illegal actions will be exposed to the public.
Ultimately, arbitration agreements often disadvantage employees and any employee should be cautious when starting a new job about whether they are accepting an arbitration agreement. If you are presented with an arbitration agreement or believe you may have one, it is a good idea to consult with an attorney to understand how the arbitration agreement changes your rights and ability to pursue claims against your employer.