In today’s day and age, it is commonplace for employers to include mandatory arbitration clauses within their employment contracts.
After all, arbitration can expedite the resolution process, protect your business’ reputation and spare the costs associated with litigation.
But an ongoing U.S. Supreme Court case has suddenly thrust mandatory arbitration clauses into the public spotlight. Employees claim that the waivers are not only detrimental to the resolution process but also illegal.
Are employees right?
Here is what mandatory arbitration clauses are and how the court’s ruling could affect your own business’ policies.
What are mandatory arbitration agreements?
Mandatory arbitration agreements are included in employment contracts for non-unionized workers. By signing the agreement, an employee forfeits their right to litigate employment disputes before a jury trial.
The agreement can also state that an employee waives their right to appeal or class action. In place of litigation, employers can choose to resolve workplace claims internally through arbitration.
Are mandatory arbitration agreements illegal?
Employees argue that such agreements are illegal and they’ve taken to the Supreme Court for relief. The employees claim that the mandatory arbitration agreements are not only illegal under the National Labor Relations Act but also unenforceable under the Federal Arbitration Act.
The Court is expected to issue their opinion in the coming months to address the employee’s claims. The Court’s decision will determine if the waivers are both legal and enforceable.
If the Court rules in favor of the employees, employers will no longer be allowed to include mandatory arbitration agreements within their employment contracts.
How does workplace harassment play into this?
Opponents of the waivers argue that the agreements silence victims of workplace harassment by resolving the claims in private.
Within arbitration, employees lose their right to appeal which can lower their chances of success and they aren’t permitted to discuss their claims publically. Critics feel as if the clauses favor the businesses’ reputation over their employees’ safety concerns. This criticism is part of the reason that the case has garnered significant public attention.
As a business owner, you want to do what is best for your business, but also your employees. Although the waivers are undergoing public scrutiny, there can be benefits of mandatory arbitration agreements.
Even so, the Court’s opinion could jeopardize your business’ own employment agreements. It may be a good idea to follow the case to ensure that your business’ policies are not only legal but enforceable as well.
