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Check your employee handbook: If your employer includes a binding arbitration provision, you've given up your constitutional right to sue if you're fired, demoted or the subject of discrimination.
An estimated 15 percent to 25 percent of the American workforce -- as many as 30 million employees -- are covered by such clauses, according to the National Employment Lawyers Association. These include employees at large corporations, such as Cisco Systems, General Electric and Johnson & Johnson.
Common in real estate, consumer products and nursing
home contracts, binding arbitration clauses are appearing in more
employment settings, where they severely restrict your ability to
sue your employers if you feel you've been treated unfairly.
If you're required to submit a dispute to arbitration, your complaint will be heard in private and the arbitrator hearing the case isn't required to follow the rule of law. Other potentially unpleasant aspects of arbitration include the fees you may have to pay, limits imposed on your right to obtain vital documents from your employer and the inability to appeal the decision.
Arbitration clauses may appear in your employee handbook, your employment contract or in a separate written notification mailed, e-mailed or faxed to all employees. Even if you refuse to sign or agree to an arbitration provision, you may still be bound by it. Many state courts have upheld the right of employers to impose arbitration on employees without explicit employee consent.
Arbitration advocates say arbitration tends to be cheaper, faster and less burdensome on the courts than litigation.
"Arbitration is faster and for that reason it is generally cheaper than litigation," says Lewis Maltby, president of the
National Workrights Institute, a nonprofit research and education organzation.
Maltby is also a past board member of the American Arbitration Association, a nonprofit provider of arbitration services.
Consumer rights advocates contend arbitration strips away your right to be heard in court and that a speedy decision isn't necessarily a just decision.
"Flipping a coin is quick, too, but that doesn't
mean it is a good way to decide the facts of a case," says Cliff
Palefsky, a partner with McGuinn, Hillsman and Palefsky in San Francisco.
"This type of for-profit justice is a scandal. American citizens
should not have their cases decided in secret tribunals with no
right of appeal."
Arbitration provisions
Most arbitration provisions have certain universal clauses governing dispute resolution, including:
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Types of disputes. Most arbitration clauses cover every type of dispute you might have with your employer, including many outside the scope of normal employer-employee relationships. Several women employed by Kellog, Brown & Root, a subsidiary of Halliburton Corp., who have alleged that they were raped by co-workers in Iraq, have been forced to arbitrate their civil claims against the company instead of suing in court. |
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Selection of arbitrator. Virtually all arbitration clauses name a specific arbitration provider. Major arbitration providers include the American Arbitration Association, the National Arbitration Forum and JAMS. |
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Governing rules. Different providers use different arbitration rules, so most clauses specify which set of rules will apply when either party files a claim. Rules vary on how arbitrators will be selected, what types of evidence can be gathered and entered and whether the arbitrator will hold a hearing. |
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Fees. While the costs of a case may depend on which set of rules apply, some arbitration clauses include a so-called "loser's pay" provision, in which the party that loses the arbitration is required to pay all of the costs of the prevailing party, including the arbitrator's fees and attorney's fees. Arbitrators' fees typically range from $250 to $450 an hour. |
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Enforceability of arbitration clause. If you challenge the enforceability of the arbitration clause, you may be forced to submit that claim to arbitration rather than being heard in court. |
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Jurisdiction. A stipulation that states where a dispute will be heard. |
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