Do You Have To Use Arbitration To Resolve Wrongful Termination?

Do you need to opt for employment arbitration to address wrongful termination, or can you pursue litigation in court? Mandatory arbitration is only obligatory when you’ve consented to it.

This article discusses arbitration in cases of wrongful termination, noting that employment laws vary by state. Therefore, consulting with a wrongful termination lawyer in your state is crucial before taking legal action. A skilled attorney can evaluate your case, provide legal counsel, and represent you in a wrongful termination lawsuit.

What Constitutes Wrongful Termination?

Employers can terminate at-will employees for any reason, but certain laws prohibit termination for specific reasons, such as discrimination. Wrongful termination occurs when an employer fires an employee for an illegal cause.

You have multiple options for addressing a wrongful termination claim, with arbitration being one of them. However, arbitration is only mandatory if you’ve agreed to it as a requirement. Alternatively, you may file a complaint with a government agency or initiate a lawsuit.

What Is Employment Arbitration ?

Arbitration is a type of alternative dispute resolution commonly used for employment disputes. In arbitration, a neutral third party, known as an arbitrator, hears arguments from both sides and issues a decision to resolve the dispute.

Arbitration is typically voluntary, though you may be obligated to sign a mandatory arbitration agreement upon starting a new job. Such agreements may also be included in your employment contract or employee handbook. In some cases, a court may order arbitration between you and your employer.

Arbitrators can be anyone, but they are often lawyers, retired judges, or experts in the relevant field. You and your employer may select the arbitrator, or a court may appoint one.

Navigating the arbitration process can be intricate, so seeking guidance from an experienced employment attorney is advisable. An attorney can assist you throughout the arbitration proceedings and advocate on your behalf.

Is Arbitration Binding?

The arbitrator’s decision, termed an award, can either be binding or non-binding. In binding arbitration, you must comply with the decision, typically agreed upon before arbitration commences. Challenges to a binding decision in court are limited to cases of fraud, arbitrator overreach, or decisions violating laws at federal, state, or local levels. Conversely, in non-binding arbitration, you or your employer may disregard the arbitrator’s decision. Specifics regarding the type of arbitration are outlined in your Employment Arbitration Agreement.

When Is an Arbitration Clause Not Enforceable?

A court may invalidate your Employment Arbitration Agreement, rendering it unenforceable. Reasons for invalidation include unfair clauses, coercion by your employer during signing, violations of public policy (such as prohibiting sexual harassment complaints), or lack of mutual agreement on the arbitration terms.

What Happens if Arbitration Fails?

Should arbitration fail, you can attempt to negotiate a settlement with your employer or pursue litigation or complaints with government agencies like the EEOC.-U.S. Equal Employment Opportunity Commission (EEOC).

What Are the Advantages of Arbitration?

Arbitration offers advantages such as a less formal process compared to court, facilitating quicker and more economical resolutions. Arbitration decisions also remain confidential.

Arbitration does have downsides, including potential costs despite being cheaper than litigation, and limited options for appealing outcomes.

Signing an Arbitration Agreement With Your Employer

Many employers request that employees sign arbitration agreements, relinquishing their right to litigate job-related issues such as wrongful termination, contract breaches, and discrimination in court. By signing such agreements, employees commit to resolving legal disputes with their employer through arbitration rather than through legal proceedings. While this may seem inconsequential when starting a new job without foreseeable legal disputes, an arbitration agreement can significantly impact your ability to seek justice if your rights are violated later on. In some cases, it could determine the outcome of your case.

Disadvantages of Arbitration

You might question why the venue for resolving claims matters, as long as they are resolved somewhere, whether in arbitration or court. Arbitration differs from court proceedings in several ways, many of which disadvantage employees. Most notably, arbitration hearings are presided over by an arbitrator—a private individual, often a retired judge, compensated by one or both parties to review evidence and testimony. Unlike court trials, there’s no jury to hear your side, where jurors often sympathize with employees.

Additionally, the arbitration process restricts each party’s access to information from the other side. In employment disputes, this typically disadvantages employees, as employers usually possess the majority of relevant documents and information.

Moreover, arbitration decisions are usually final and cannot be appealed, unlike court rulings. If you believe the arbitrator’s decision is unjust or incorrect, you won’t have the opportunity for a second hearing in a higher court, as you might with a trial.

Advantages of Arbitration

However, arbitration does offer some advantages over court trials. It is less formal, which can simplify the process, particularly for employees unfamiliar with legal proceedings. Arbitration cases also tend to be resolved more quickly than court cases, which can drag on for years.

Reading Documents Carefully

Employees often inadvertently sign arbitration agreements. How does this happen? Some employers provide new hires with extensive paperwork on their first day, and some employees sign documents without thoroughly reviewing them. While many employers present arbitration agreements openly as separate contracts, others bury them within other documents such as employment contracts, offer letters, or employee handbooks.

When you sign any document from your employer—whether a contract, acknowledgment form, or handbook—you are legally agreeing to all its terms, including those you may not have read. This is particularly risky with lengthy handbooks. To protect your rights, avoid signing any acknowledgment or agreement form unless you have read and fully understood its contents.

The Risk of Refusal

If your employer asks you to sign an arbitration agreement, refusing could jeopardize your job security. Typically, employers can withdraw a job offer from a prospective employee who declines to sign, or terminate an at-will employee who refuses to agree. However, some employers may negotiate this requirement, especially for highly valued employees or sought-after candidates.

Alternatively, you could agree to sign the agreement under the condition that its terms are fair to you, as discussed below.

Negotiating Fair Terms in the Agreement

If your employer refuses to allow you to decline signing outright, they may be open to negotiating certain terms of the agreement to make it more equitable for you. While your employer may not concede to all your requests, it’s unlikely they will terminate you for initiating negotiations. Negotiating the terms of your arbitration agreement is akin to discussing your salary or benefits—you’re advocating for your interests just as your employer is for theirs.

Consulting with an attorney may be necessary to help negotiate the fairest agreement possible. Here are some provisions that can help establish a more equitable arbitration process:

• Choice of Arbitrator: You should have an equal say in selecting the arbitrator compared to your employer. Given the arbitrator’s significant authority and the lack of appeal options in arbitration, having equal rights with your employer in choosing the arbitrator is crucial. Both parties should be able to reject at least one arbitrator without providing a reason.
• Disclosure of Information: Potential arbitrators should disclose information about their business and personal interests to ensure they are impartial and not biased towards the employer. For instance, an arbitrator should not have financial ties to the company. You and your employer should have the right to reject any arbitrator with a conflict of interest.
• Arbitration Costs: Since arbitration is at the employer’s request and incurs costs, the employer should bear these expenses.
• Available Remedies: Ensure that arbitration allows you to seek all remedies available in a court of law. For example, the agreement should not prohibit you from seeking punitive damages or damages for emotional distress.
• Legal Representation: You should have the right to be represented by an attorney throughout the arbitration process.

You Can Still Seek Assistance from Government Agencies in Fighting Discrimination

Even if you sign an arbitration agreement and experience discrimination by your employer, you can still file a complaint with a government agency like the Equal Employment Opportunity Commission (EEOC). The agency retains the option to litigate against the employer on your behalf in court, as the arbitration agreement you signed pertains solely to your personal claims and does not restrict the agency’s enforcement of the law.

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