a trial to resolve the dispute because
arbitrators are often not willing to grant
motions to dismiss or for summary
judgment. These factors often work to
increase the time and expense needed to
resolve employment disputes.
Finally, if an employee files a case in
a judicial forum, the employer must incur
fees in seeking to compel arbitration and
in defending the validity of the arbitration
agreement. If the court denies the motion,
the employer may appeal; if the motion
is granted, however, the employee has no
right to appeal that decision.
and disadvantages of arbitration, an
employer decides to implement a policy
to arbitrate employment-related disputes,
the employer should consider the
following steps to reduce the prospects
of a successful challenge to the validity
and enforceability of the agreement or
policy. First and foremost, the agreement
should be in writing and signed by
the employee (this can include the
employee's signed agreement to abide
by the employer's arbitration or dispute
resolution policy). Agreeing to arbitration
can be made a condition of employment,
but the prospective employee should
be made aware of and explicitly agree
to the arbitration policy. It is prudent
to include an explanation of the basic
features of arbitration as well as the fact
that agreeing to arbitration means that
the employee is giving up his or her right
to have a dispute heard by a jury. Some
companies even go so far as to allow an
employee the opportunity to "opt out"
of the arbitration agreement, and also
retaliation for exercising an opt out right.
Employers should also be careful not to
include a broad reservation of rights to
amend or alter the arbitration agreement
or policy, as such provisions have been
used to invalidate arbitration agreements
as illusory.
policy should specify the venue as
well as applicable procedural rules.
The American Arbitration Association
has adopted a comprehensive set of
Employment Arbitration Rules and
Mediation Procedures, which can provide
a useful framework for resolving disputes.
The agreement or policy should also:
of arbitrators;
be covered;
that are consistent with applicable
statutes of limitation;
discovery;
that would have been available to the
parties had the matter been heard in
court; and
precluded from filing complaints with
federal, state or other governmental
administrative agencies.
specify applicable law. While the FAA
preempts conflicting state laws, some
state laws set forth procedural rules that
may offer provisions that are attractive to
companies. Colorado law, for instance,
precludes awards of exemplary damages
in an arbitration.
damages award in a federal employment
discrimination case, express adoption of
Colorado law could preclude the award of
punitive damages for state law claims.
Before adopting a dispute resolution
policy that includes arbitration of
employment claims, employers should
carefully consider the advantages and
disadvantages of litigating those claims
outside of a judicial forum. Arbitration
agreements need to be carefully crafted to
withstand judicial challenge, and counsel
should be consulted to determine the best
course of action under applicable state
and federal laws.
waiver "unlawfully restrict[ed] employees' Section 7
right to engage in concerted action for mutual aid or
protection, notwithstanding the Federal Arbitration Act,
which generally makes employment-related arbitration
agreements judicially enforceable." D.R. Horton, Inc., 357
N.L.R.B. 2277 (2012). The Fifth Circuit Court of Appeals
disagreed, and the Supreme Court granted the NLRB's
petition for writ of certiorari. The Court also agreed to hear
two other cases raising the same issue, Epic Sys. Corp. v.
Lewis and Ernst & Young LLP v. Morris.
State arbitration laws generally provide similar limited
appellate rights.
4 Carey v. 24 Hour Fitness, Inc., 669F.3d 202 (5th Cir.
(American Arbitration Association) (available at adr.org).