Arbitration and your rights on the job |
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Escape hatches
While carefully worded arbitration clauses are virtually impossible to overturn in court, clauses that place what a court would view as an
"unconscionable" burden on a consumer are challengeable, according to Paul Bland, a staff lawyer with Public Justice, a consumer rights group.
"It is still surprisingly common to see an arbitration clause that contains unreasonable provisions," he says. "There are cases where a company just gets too greedy and puts in a clause that can be attacked. Still, in general, arbitration clauses have been enforced by the courts and can only be attacked on very narrow grounds in terms of a mistake in the way that the contract containing the arbitration provision was formed."
Whether a particular clause is thrown out also depends
on the state where the employee works, as state courts have radically
differing views on what constitutes unconscionable in an arbitration
clause. Provisions that may make an arbitration clause vulnerable
to attack include:
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| Arbitration errors |
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Excessive costs imposed on the employee to pursue a claim. |
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The burial of a binding arbitration clause within a larger document or in fine print. |
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Application of a claim outside the scope of an arbitration clause to an arbitration policy. |
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Provisions that limit the relief available to the employee to less than what is available under state law. |
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Provisions that prevent employees from addressing discrimination and wage and hour complaints through federal agencies. |
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State law in California is about as friendly to employees
as employment arbitration gets, Palefsky notes, requiring employers
to pay all the costs of binding arbitration and providing many of
the same rights and remedies available to employees as are available
in court.
Other gotchas
While many employers favor arbitration clauses in their employee handbooks, agreements and contracts, some are turning away from arbitration in favor of other means of resolving employer-employee disputes.
"If the goal of arbitration is to save you money, you clearly have to balance that goal off the cost of litigating whether the clause can be enforced in a variety of jurisdictions," says Sarah Kelly, an employment law attorney who works on the employer side for law firm Cozen O'Connor in Philadelphia.
So employers are turning to other provisions allowing employees to pursue litigation in the event of a dispute, but limit that right in certain ways.
"One method that is gaining traction among employers is requiring employees to waive their right to trial by jury," says Frank Scruggs, an employer-side attorney with Berger Singerman in Ft. Lauderdale, Fla. "When employees waive their right to a jury trial, employers are able to eliminate their exposure to potentially large jury verdicts while preserving the rigorous legal process of the court system."
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