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Arbitration agreements: some things to be aware of

In our last post, we began speaking about arbitration agreements in employment disputes, pointing out the potential bias toward employers in arbitration and the lack of protections for employees.

On the latter point, one of the issues that can come up is the lack of access to discovery, which is the process by which parties gain access to information that will help them to gather evidence to support their claim. The court system allows employees to utilize the discovery process, which gives them access to evidence that would not otherwise be available to them. Discovery is not as readily and extensively available in the arbitration process.

Another issue with arbitration is that the arbitrator isn’t necessarily going to have a strong handle on the interpretation and enforcement of laws governing the employment relationship. In the court system, judges handling these cases have this expertise and there is an extensive appeals system to check them if they make mistakes.

Another issue with arbitration is that the costs can be high, particularly when arbitration is forced in accordance with an employment contract. Courts may strike down arbitration agreements as unenforceable when the costs are particularly high, but the law is not yet settled on this matter.

In terms of bias, courts can strike down arbitration agreements when the selection process for the arbitrator is deemed unconscionable, such as when an employer has complete control over arbitrator selection. It can be a challenge, though, to determine exactly how selection takes place.

In our next post, we’ll speak briefly about signing arbitration agreements as part of an employment contract and what factors should be kept in mind when doing so. 

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