Employment Arbitration Agreements

An employee who feels wronged by his or her employer may believe he or she can take the case to court. The employee may have suffered racial, sexual, or religious harassment on the job or lost out on a job opportunity or promotion due to ethnic, gender, or age discrimination. The natural reflex is to believe that, when push comes to shove, a judge or jury will hear the case. But the reality is much different.

To begin with, very few cases have sufficient merit even to be filed in court or with an administrative agency such as the Oregon Bureau of Labor and Industries or Equal Employment Opportunity Commission. This is not to say many employees are not treated unfairly; they are. It is to say, however, that the law recognizes only certain kinds of unfairness or inequity in the workplace as issues that may be tried in court. The vast majority of workplace issues, including discharges, cannot be tried in court because of the "at will" employment rule. In essence, the rule states that in most workplace situations an employer is free to fire an employee for any reason (or no reason), and an employee is free to quit whenever the employee likes.

Even when an employee's case has legal merit, however, there may be an obstacle standing in the way of court. Increasingly, employers are requiring non-union employees to sign employment arbitration agreements that require claims of discrimination, harassment, or retaliation to be tried before an arbitrator instead of in court (unionized employees usually have the benefit of "just cause" provisions stating that they cannot be disciplined except for just cause and, in the event they are disciplined, that they may utilize grievance and arbitration provisions in their collective-bargaining agreements). Typically, an employment arbitration agreement has been signed by the employee as a condition of starting work for the employer. The agreement usually covers most state and federal claims, which then must be tried before a single arbitrator chosen by both sides (workers' compensation claims are an exception).

Thus, an employment arbitration agreement dispenses with a judge and jury. The agreement usually allows for far less discovery of evidence prior to the hearing than would be allowed in court, and an award may be less than what a jury might award. Employment arbitration agreements are now being required of employees in a wide range of industries, including food-service, retail, law firms, and financial services. If an employee signs such an agreement, and the agreement potentially offers the relief the employee might have obtained in court, the agreement is binding on the employee in the event of a workplace dispute. So too is the arbitrator's decision, which cannot be appealed.

Look for employers to use more and more of these agreements. If you know you signed an employment arbitration agreement and are faced with an employment dispute, be sure to advise your lawyer that you signed one. It could have a dramatic impact on the outcome.

Disclaimer: This article is published by the Law Office of Kevin Keaney for those working or interested in employment and labor law. The articles are intended to supply general legal information and are not intended to be a substitute for legal representation or advice.