I Signed An Arbitration Agreement: What Does That Mean?

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Due to the growing number of lawsuits involving employment issues, more and more employers are conditioning employment on the employee agreeing to submit to binding arbitration. Such terms are often clauses contained within a more comprehensive written employment agreement. However, an arbitration agreement in the private sector may be a stand-alone agreement as well. For public sector employers, arbitration clauses are often contained within personnel policies or collective bargaining agreements (i.e. contracts between management and a union). Arbitration agreements may apply to any and all types of disputes in the workplace, up to and including claims of discrimination.

Typically, you, the applicant or new hire have no option and must sign an arbitration agreement as a condition of employment. Although you are clearly not in a position of equal bargaining strength, courts have routinely held that the mere offer of employment, or continued employment if required to sign an arbitration agreement after starting a job, is sufficient consideration.

What is arbitration? An arbitration agreement in the employment context is a contract whereby the employer and the employee both agree to give up the right to litigate workplace disputes; most notably termination of employment.  The actual arbitration proceeding is relatively similar to a trial, in that there is a decision maker (the arbitrator), who determines the issues, just as a judge would. Such agreements should state how the arbitrator is selected and who is responsible for the costs, with the agreement typically stating that the costs are split evenly. Some agreements also provide that the losing party may be assessed all costs.

Why do employers require arbitration of employment disputes? More and more employers prefer arbitration clauses because, in arbitration, there is no jury. Employers are fearful of juries as being unpredictable and biased against employers, as well as the “David v. Goliath” impression that a jury may have by an employee going against the larger employer. Employers are also fearful that a jury may be swayed by sympathy or empathy and more likely to award huge dollar amounts to someone they feel was wronged. Arbitrators are usually retired judges, lawyers, or business professionals, and, employers believe, are more likely to set their emotions aside and look only at the facts.

On the plus side, arbitrations are typically less costly to both parties than litigation, and generally are resolved much quicker than going through the court process. In addition, generally no rules of evidence apply or are severely relaxed, and the procedures in arbitration are much more streamlined than the court process.

Unless an arbitration agreement is found to be unconscionable (i.e. patently unfair in how it was presented or in its application and remedies), it will most likely be upheld by a Florida court. In addition,  if the arbitrator is permitted to potentially award the same remedies as the statute would provide (such as under the Florida Civil Rights Act, for example), then such agreements are also usually deemed to be valid and enforceable.

At Wilson McCoy, P.A. we have represented many employees with arbitration agreements.  If you would like to know more about your rights in your particular circumstance, please contact us today at (407) 803-5400 for an analysis of your situation and to schedule a consultation.