More and more employers are requiring a “mandatory arbitration” clause for new hires. Arbitration is an informal and expedited legal process by which disputes between two parties is handled outside of court. Employers and legislatures across the United States and Florida widely favor arbitration clauses because they reduce burden on the court system and drastically reduce employer’s legal fees and awards for damages. The one group that often does not benefit is the employees. Arbitration nearly always benefits the defendant even if they are held to be 100% liable for illegal action. In most cases the employee is presented with an arbitration clause in their employment contract or new hire paperwork as a condition for employment, thus creating a “take it or leave it” scenario for a job offer.
The Federal Arbitration Act has failed to protect consumers and employees from predatory arbitration clauses, several proposals for amendments have been made in the last 5 years, however all have failed. It is clear that there would be popular support for an amendment that protects employees, however arbitration remains a rarely discussed topic and major lobbying efforts from corporations have succeeded in killing each amendment proposal.
Here are some top considerations for employees signing a mandatory arbitration agreement:
Cost – Unlike most employment cases which can be taken by Employment & Labor attorneys on contingency, arbitration requires the claimant to pay to initiate a claim. The initial fee varies but is generally upwards of $750.00 and does not include the hourly attorney rate which usually starts at $300 per hour. Most employees seeking damages from an employer cannot easily afford these fees, creating a hug barrier for entry to their claim. It is not uncommon to see an arbitration fee totaling between $2,000.00 and $3,000.00, which must be paid in advance.
Arbitrator Bias – Arbitration is a business and as such, they rely on repeat business, so often they will lean towards the side of the employer in hopes that they will use them again when another employee has a dispute. Under the guise of being fair and impartial they will often facilitate an award that would be considerably less than what a claimant could see in court. A judge or jury often will award full damages if the employer is found liable. However, arbitrators often “split the difference” in a claim dispute resulting in significantly lower compensation for the employee.
Confidentiality – Lawsuits are a matter of public record, once a suit has been filed it is open for the world to see, even if a settlement is reached before trial. However, in arbitration, the records remain private and as part of a settlement agreement the claimant is often required to sign a non-disclosure agreement to prevent any public discovery of wrongdoing. Arbitrators are private entities making a Freedom of Information Act (FOIA) request fruitless.
Venue – Arbitration clauses often contain a provision that allows the employer to choose which arbitrator and venue claims must be made. This could cause a severe disadvantage for employees, forcing them to travel long distances for arbitration sessions and creates pressure to take an unsatisfactory settlement.
Limited Causes of Action – Arbitration limits other aspects of normal court proceeding such as participation in a class action, injunctive relief, and punitive damages and limits discovery of evidence.
If you are an employee with questions regarding a mandatory arbitration clause or other aspect of an employment contract, our experienced Employment & Labor attorneys can help. The attorneys of Massey & Duffy have assisted hundreds of employees with their legal rights and have the knowledge and expertise to help preserve your rights. Please call our office at (352) 505-8900 to schedule your FREE CONSULTATION today.
Mandatory Arbitration: What Rights are you Giving Away?
Massey & Duffy