Regret Signing That Arbitration Agreement? You May Still Have Options.
On May 26th, 2016, the Seventh Circuit of the U.S. Court of Appeals in Chicago made an important decision regarding the arbitration agreements many companies require employees to sign.
The case involved Epic Systems, a Wisconsin company whose arbitration agreement prohibited employees from joining class action lawsuits against the company or going to court against the company at all.
Although arbitration agreements have been upheld by Supreme Court cases in the past (particularly in reference to consumer-facing agreements), Lewis v. Epic Systems demonstrated that forcing employees to sign such clauses could stand in violation of the National Labor Relations Act.
The decision of the Seventh Circuit could be a significant turning point in a commercial landscape where mandatory arbitration agreements are becoming increasingly popular, even for smaller businesses.
Why do so many businesses have arbitration agreements?
Arbitration is a common method of resolving legal disputes without the involvement of a judge or jury. It can protect the financial interests and reputation of a business, because arbitration proceedings are often subject to confidentiality requirements.
By requiring employees to settle all of their disputes individually and privately, companies can also prevent their workplace as a whole from knowing about any potential misconduct or legal problems.
Having employees sign arbitration clauses can also subconsciously dissuade or disempower them from trying to resolve disputes in the first place.
In a recent case involving co-working startup WeWork, an employee was fired for refusing to sign the company’s arbitration agreement. The employee has in turn filed a lawsuit against WeWork for possible labor law violations.
I already signed an arbitration agreement—what can I do now?
If your employer has wronged you in some way, it’s important that you seek attorney representation, regardless of whether you think the arbitration agreement is binding.
If it is determined that arbitration is indeed your only legal avenue, make sure that your lawyer is qualified to resolve employment disputes and has experience handling arbitrations. Whoever represents you must thoroughly investigate your claim and meticulously review your original employment contract.
Employees often accept unfair settlements or lose entirely because they don’t know the full scope of their legal options.
Bear in mind, also, that there is not yet a consensus on the legality of certain aspects of arbitration agreements. As demonstrated by the Epic Systems case, it is possible for courts to rule arbitration agreements unenforceable.
Lastly, if you have signed an arbitration agreement, it is vital that you retain any documentation related to that agreement, your employment as a whole, and the dispute in question. In the event that your dispute is ultimately resolved by trial or arbitration, having strong evidence of your claims will be essential.