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Mandatory arbitration clauses and employment contracts

Per recent decisions by the United States Supreme Court, arbitrators may have been given more leeway in employment contract determinations under the Federal Arbitration Act (FAA). This provision required workers and consumers alike to abide by contracts that required arbitration to decide a dispute.

In Nitro-Lift Technologies, LLC vs. Howard, the court allows for mandatory arbitration provisions to be inserted in most employer/employee contracts, and it purportedly limits the ability of states like Connecticut to pass laws that would dictate how arbitrators should rule. The decision may allegedly also limit the ability of groups of employees to band together to file a class action against an employer when an arbitration provision in the employment contract rules.

More and more employment litigation matters are going to arbitrations, and it should not be assumed that only minor disputes will be arbitrated. Courts are more frequently handing off employment litigation matters to be disposed of through alternative dispute resolutions such as mediation or arbitration.

But while many employment matters may be disposed of through arbitration, it would also be a mistake to assume that these sorts of matters have become any less complex for corporations to deal with. Any sort of dispute can become a major headache for a business to have to resolve. Nothing should be taken for granted as almost every employment dispute needs to be handled carefully.

For this reason, attorneys require much earlier involvement in such disputes before these matters get out of hand. It also means that attorney attention may be needed in the wording of arbitration clauses that are contained in employment contracts.

Source: Jurist, "The Danger of Unanimity in the Supreme Court's Recent FAA Decision," by Rochelle Bobroff, Dec. 31, 2012

  • Our Hartford law firm's webpage contains a great deal more information regarding employment claims and non-compete' agreements.

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