What is an Arbitration Agreement?

An arbitration agreement is a promise to resolve most legal disputes in private arbitration rather than in a court of law. Arbitration agreements often appear in an employment contract or could be a separate document that sets an agreement between you and your employer regarding how legal disputes that arise during the course of your employment (or even after your employment ends) will be resolved.  The arbitration provision may even have been something you agreed to and signed when you first started your job, including through an online portal that may have had other onboarding or human resources documents.

So, What Does Arbitration Involve?

Arbitration is a private way of resolving differences on legal matters by appearing before an entity whose job it is to resolve those issues.  Examples are the American Arbitration Association (“AAA”) and the Financial Industry Regulatory Authority (“FINRA”).  Instead of having your case before a judge and jury, your case will be heard by an “arbitrator” (usually a retired judge or experienced attorney) who follows the same law, but different rules of procedure.

Employers often see advantages in arbitrating.  For example, arbitrations, unlike court proceedings, are private.  This means that only the parties can attend an arbitration, and the parties would need to agree in order for the decision to be made public. In court, by contrast, almost every filed document is available to the public.  In addition, arbitrations are perceived as proceeding more quickly than court cases. Third, while arbitrators certainly try to be fair, retired judges and lawyers are much less likely to be swayed by the emotional aspects of your story than a jury of your peers would be.

Does This Mean I Must Arbitrate Instead of Having My Day in Court?

In most cases, the answer is yes.  There are certain circumstances in which there may be flaws in how the arbitration agreement was presented to you that could prevent it from applying, but that is usually the exception.   On a separate note, New York State recently enacted laws seeking to remove sexual harassment and other discrimination claims from being subject to arbitration, but there are serious questions about whether this law is correct since it may conflict with other laws about arbitration.

This Seems Unfair—Are There Any Reasons Employees Want to Arbitrate?

There may be advantages to you in keeping the matter private since some employees do not want potential employers to know about a dispute with a former employer, and an arbitration may help keep the matter quiet.  Also, in most cases in which an arbitration agreement is in place, the arbitration will take place before a reputable and well-known organization, so you have comfort in knowing that the process will be fair.  Regardless, engaging a lawyer can always help assure your voice is heard.

If you would like to discuss your situation with us, please feel free to call or email us at any time. You will be on the phone with an attorney within 24 hours.