IS EMPLOYEE BOUND BY ARBITRATION AGREEMENT?
QUESTION: When I was hired in at my present job, I was asked to sign a lot of “on-boarding” documents, which included an Arbitration Agreement. Two years on, I believe I have been the victim of sexual harassment, and want to sue the company, but I’m told I must use the arbitration process, and I have to pay for the arbitrator. Is there any way out of this?
ANSWER: Courts, both state and federal, are generally not willing to strike down an arbitration agreement, unless the agreement is so patently unfair to the employee that it violates the standards of ethics for arbitration.
What kind of things would make an arbitration agreement unenforceable? Not a lot. However, Courts have held that if the employer has unilateral control over the arbitrator, and if the employer chooses an arbitrator who is clearly not affordable (assuming the agreement requires the employee to pay for arbitration), the agreement might be rendered unenforceable. See, for example, McMullen v Meijer, Inc., 337 F.3d 697 (CA 6, 2003).
An agreement can also be held unenforceable if only one of the parties to the agreement is bound to it. In Heurtebise v Reliable Computers, for example, Michigan’s Supreme Court ruled that an arbitration agreement that was contained within an employee handbook was not enforceable as a binding contract where the employer reserved the right to revise the terms of the handbook at any time. Not surprisingly, more employers are now creating the arbitration agreement as a separate document.
What should a prospective employee or new hire do when confronted by an arbitration agreement that asks him to submit any claims relating to unfair treatment at work to an arbitrator – often at the employee’s expense, and to an arbitrator of the employer’s choosing?
Unfortunately, unless the employee is a skilled professional whose services are highly valued or unique, there is not much an employee can do. Failure to sign an arbitration agreement can result in a job offer being rescinded – or never offered at all.
Yet the push to force workers to arbitrate their grievances is relatively new. Until 1991, only about 2 percent of workers were subject to arbitration agreements. That changed with the Supreme Court’s decision in Gilmer v Interstate/Johnson Lane Corp, (1991), which up held mandatory arbitration agreements, even to claims brought under Civil Rights statutes like the Age Discrimination in Employment Act. According to a 2018 survey by the Economic Policy Institute, arbitration agreements now deny more than 60 million American workers access to the courts. Moreover, according to the same report, these mandatory agreements are more common in low-wage workplaces, and in industries that are “disproportionately composed of women workers and … of African American workers.”
What can you do about the arbitration agreement you signed. Likely, not much – but you can consult an attorney, who can evaluate whether the agreement in your case is likely to be enforced.
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By: Daniel A. Gwinn, Esq.
Attorney and Counselor at Law