Should employers use arbitration agreements?

There remains confusion regarding whether employers should have mandatory arbitration clauses in employment contracts. On its face, arbitration agreements seem to be a win for employers. It allows employers to avoid costly class-action lawsuits from employees filing wage and hour claims. Instead, employees agree to resolve complaints individually through arbitration. Last month, the Supreme Court found that arbitration agreements did not violate federal law.

However, not everything about the law is cut-and-dried. In recent months, for example, two different federal courts of appeals have struck down arbitration agreements. Clearly, arbitration agreements themselves are not above court examination.

Non-legal considerations

The debate over whether to include arbitration agreements is more than legal. In a robust economy, employees have more leverage over employment terms. Including mandatory arbitration agreements may be a point of contention at the beginning of an employment relationship. In addition, some states and municipalities have begun giving contracts to employers who do not require their employees to sign mandatory arbitration clauses.

Arbitration agreements and non-disclosure agreements have also begun to receive negative attention in the public and the press. Employers will have to weight the benefits of having the legal protection of an arbitration agreement against these drawbacks.

Know the legal options

Regardless of what an employer decides, it is vital that in this ever-shifting and potentially contentious area of the law, employers and employees get the assistance of an experienced employment law attorney to ensure they are aware of their legal rights and obligations.