More and more employees across Texas are being required to sign binding arbitration agreements with their employers. These arbitration agreements are oftentimes found in employment contracts, but can also be found in standalone agreements that an employer presents to an employee. Oftentimes, there is little to no negotiating of the terms of these agreements. The employer hands the document to the employee (or potential employee), and tells the employee that he or she must sign the document as a condition of employment. While it may seem unfair, there is little that prevents an employer from doing this.
What is arbitration?
Arbitration is an alternative process for resolving legal claims outside of the court system. The rules that will govern the arbitration process are most often laid out in the contractual agreement between the parties. In arbitration, an arbitrator is chosen by the parties to oversee the case and make procedural decisions very much like a judge would. Like a lawsuit, the parties will go through some form of discovery where documents are exchanged and the parties get to make evidentiary inquiries of one another. There will also be certain deadlines for the parties to conduct discovery and file any motions with the arbitrator. Ultimately, there is a hearing that takes place instead of a trial, and the arbitrator issues a ruling. These rulings are typically final, but they may be appealable depending on the rules.
How does the arbitration agreement affect me?
It is impossible to say how your specific arbitration agreement may affect you without reviewing it. However, most arbitration agreements will prevent an employee from pursuing any legal claims against his or her employer in court. Instead, the employee will be forced to pursue the claim through arbitration. While there are a lot of similarities between arbitration and a lawsuit, there are also very stark differences.
- Cost-costs of arbitration are typically much higher for the employee than in a lawsuit.
- Rules- of arbitration differ from those that apply in a state or federal lawsuit. While this does not necessarily mean that the rules are always stacked against the employee, the reality is that arbitration agreements can deter employees from pursuing claims against their employers.
- Off the Record– Arbitration proceedings are typically not part of the public record. This confidentiality element generally favors employers and prevents any influence from the court of public opinion.
An arbitration agreement does not waive your rights to pursue claims against your employer. For example, you still have the right to file a Charge of Discrimination with the Texas Workforce Commission (TWC) and Equal Employment Opportunity Commission (EEOC). However, once the TWC or EEOC has issued a right to sue, you are likely forced to pursue the case further in arbitration.
So, you’ve been handed an arbitration agreement and told to sign it or you’re out of a job. What do you do? While it is always advisable to thoroughly review whatever document you are signing, the reality is that if you do not sign the document, you are likely out of a job. You can always contact an employment attorney in your area to discuss the document before you sign it. And if you have already signed an arbitration agreement, remember that it is not the end of the world. You are not releasing your claims because of that agreement, but you are binding yourself to a completely different legal proceeding.
