Most employers put employment arbitration agreements in their employees’ contracts and usually, the employee is unaware of what they’re agreeing to. Anyone who has recently signed an employment contract probably agreed to employment arbitration, meaning they won’t sue the company if they think they were terminated unfairly or might have been subject to discriminatory practices.
If you find yourself unable to sue your employer, then you likely signed a contract with an arbitration clause. Once a contract with an arbitration clause is signed, the employee has agreed not to take the employer to court for any reason.
If the employee does have any issues with the employer, they have to settle their problems through arbitration. Arbitration is very different from a lawsuit, as the case doesn’t go to court or before a judge or jury.
Many times people are just excited to be starting a new job and don’t see any issue with signing their rights to a lawsuit away because they probably think the likelihood of a lawsuit is pretty low. If later on down the road issues arise with the company, an employee will probably regret signing the contract with an arbitration clause, because it could cause a legitimate case against the employer to be lost.
As part of the arbitration process, the following will happen:
- A neutral party (known as an arbiter) will go over any evidence given for the case against the employer.
- The arbiter will make a decision on the case.
- The arbiter will decide if the employer owes the employee any money and how much (which is called an arbitration award).
Employers prefer arbitration to court cases because it is simpler and not as costly.
For an Employer, there are some advantages to arbitration, including:
- There is no jury, but the outcome relies solely on the view of the arbitrator who is likely fair and lawful, although juries tend to sympathize more with employees.
- Usually, employees going through arbitration won’t have access to all of the files and potential evidence that they need to make their case because they can’t request as much from the employer as they could in a court case.
- Most arbitration decisions are final and can’t be appealed, so if an employee feels that they received an unfair ruling, there isn’t much they can do about it.