Arbitration Agreements - Yes Virginia, You May Have Given Up Your Rights

Arbitration agreements and waiver of right to trial pop up all over the place in employment situations. Some of the documents employers like to stick them to get you to sign away your right to sue are applications, handbooks, employment agreements, arbitration agreements, union contracts – just about any place they can think of to get you to sign without thinking.

Even if you have time to think about them, most states will let employers get away with making you sign away rights you thought were guaranteed in the constitution. Although there's a move afoot in Congress to change this, right now assume your arbitration agreement will be enforced.

If an employer presents you with an arbitration agreement or waiver of your right to trial pre-employment or during your employment, that’s the time to negotiate to make it go away. If the employer won’t negotiate, you can accept it or turn down the job. If they present it to you after you’ve accepted the job, most states will let them say, “sign it or be fired.”

I've seen employers argue that a page acknowledging receipt of the handbook (not having read it) is enough to bind the employee to an arbitration clause even though the handbook specifically said it wasn't a contract. Do they get away with this? Maybe.

Courts love arbitration agreements. It lightens their workload. Don’t expect help from the courts anytime soon. The remedy will have to be through Congress or your state legislature.

Here’s what you need to know about arbitration.

Arbitration defined: An arbitration where you submit your employment dispute to a neutral third party instead of the courts. Some arbitration is non-binding, that is, the parties can still go to court if they aren’t satisfied with the decision. But most arbitration is binding on the parties. That means you don’t even get to appeal an arbitrator’s decision under most circumstances.

Arbitrators: An arbitrator who handles employment arbitrations is usually a current or former employment lawyer, HR person, or other individual with experience in employment law matters. Arbitrators go through training on the process before they are approved to be on a panel. Depending on your arbitration agreement, you may have one or three arbitrators on your panel. You will usually have some input into the choice of your arbitrator. You will always be able to seek to remove them if they have a conflict of interest.

Rules: Most arbitration forums have detailed rules you need to follow throughout the process. Try to elect a forum, if you have a choice, that has employment rules (a great example is American Arbitration Association, which has separate rules for employment disputes), not just general commercial rules. Employment rules usually have some built-in due process protocols to protect individuals. Commercial rules are more geared toward businesses, and may assume the businesses are represented and experienced in arbitrations.

Discovery: Usually, arbitration relies on mutual exchange of documents, no depositions, and no full discovery that you’d get in courts. However, in employment situations, many arbitrators will allow limited discovery and depositions. It’s important to understand what will be allowed from the start of your process.

Costs: Who bears the costs is decided in the arbitration agreement or, if the agreement is silent, in the rules of the arbitration forum. If the rules require the employer and employee to split costs equally from the beginning, that’s a huge advantage for the employer. Remember, arbitrators have to be paid for their time. Most employees, especially unemployed ones, can’t afford to pay. The better way is to have the employer bear the costs from the beginning, then if the employee loses have them assessed with all or some of those costs at the end. But if your employer chose the forum and wrote the agreement, can you guess which way they’ll likely choose? If you have a lawyer representing you, they may be able to fight to get a fair apportionment of costs.

Time: The good news is, arbitration is usually quicker than a court case. The bad news is that there may be shortened deadlines for filing. Read your agreement and the rules very carefully.

Donna’s tips:

a. Arbitration has lots to offer as a form of alternate dispute resolution. It can save time and money, and the person making the decision is experienced in employment law. If there are due process protocols in place and a fair cost allocation, arbitration is nothing to fear.

b. Just because a proposed arbitrator handles primarily employer-side law, doesn’t mean they’ll be bad on your case. Most arbitrators take their position as neutrals very seriously. I’m an arbitrator who also happens to be a lawyer representing primarily employees, and I’ve ruled for management in some of my arbitrations. I've seen management-side lawyer/arbitrators rule for employees. Go for experience, a balanced resume, and if you can, look at some prior decisions before you make a decision on which arbitrators to strike from your panel.

c. Sometimes both sides hate the arbitrator choices the forum offers. Both sides can agree on an arbitrator they like outside the agreed forum.

d. Most objections you hear in court won’t apply to arbitration. Arbitrators can hear irrelevant evidence and all sorts of evidence and testimony that would be inadmissible in court. They tend to err on the side of allowing more, rather than less, information.

e. You don’t have to be represented in arbitration any more than you have to be represented in court. Still, if you can find a lawyer who handles employment arbitrations you’re better off than going it alone in most cases.

Stupid HR Stuff: Can Anyone Tell Me the Point In Not Giving Copies of Contracts and Policies?

I’m sure this doesn’t apply to you. You’re one of the smart HR people. You have no dumba-- tendencies at all. But maybe you know someone who does this, so feel free to pass it on.

Noncompete, Confidentiality and Non-Solicitation Agreements

At least once a month, I have to request a copy of a former employee’s noncompete, confidentiality or non-solicitation agreement. Why? Because HR refused to give them a copy when they signed it.

My conversation with the client after they get the nastygram from the company lawyer usually goes like this:

Me: “Do you have a copy of the agreement?”

Client: “No.”

Me: “Why not?”

Client: “They told me it’s their policy not to give copies.”

Me: Pounds head on desk. “Then how are you supposed to know what you’re not allowed to do?”

Client: Shrugs.

Better yet, there’s this conversation:

Me: “Do you remember even signing an agreement?”

Client: “I don’t think I did. They handed me a bunch of papers my first day, but I think I’d know if I signed a noncompete.”

So I ask you, what the heck is the point of withholding the agreement? Better yet, I’m having a conversation right now with a company representative where, even after the nastygram, they’re refusing to give me a copy of the agreement. Apparently, I’m supposed to rely on their good word that: a. my client signed anything and b. they agreed not to work in their profession anywhere in the universe for a year. Hello? Anyone in there? It’s your burden to prove the contract exists, not mine.

If you can’t prove it to me, I assume what you’re saying is BS. Because about 1/3 of the time, employers claim that employees signed agreements that don’t exist just to scare and bully them into not working for a competitor. And don’t even think about forging one. I have a handwriting expert, and I’m not afraid to use him. (Yes, this really happens.)

The point of a noncompete agreement is to tell the employee what they are and aren’t allowed to do. If you don’t give them a copy, they have no idea. So you can’t blame them when they accidentally breach, can you? I’d like to hear you explain to a judge or jury how the employee was on notice of their obligations when you wouldn’t give them a copy. Can anyone say unclean hands?

Employee Handbook

Even better than this idiocy is the company that has the employee sign a paper saying they’ve been given the company handbook. When I ask where it is, the employee tells me they didn’t get a copy. Why? The company considers the handbook confidential. Say what?

The point of the handbook is to inform employees what is expected of them. What’s the point of refusing to give it to them? Are you that financially desperate that you can’t afford the $2.50 to copy it for them? Is it worth risking losing out on the defense you have if they fail to report sexual harassment when there’s a published sexual harassment policy? Do you think having them sign a paper saying they received it will make a difference when the jury hears that you made them sign something that wasn’t true? Why on earth wouldn’t you want employees to understand what conduct is prohibited? Why wouldn’t you want them to understand your absentee, discipline, and dress code policies?

Enlighten Me, Please

Maybe someone out there in HR can enlighten me. Because I see this refusal to make copies as pointless and stupid, maybe even dangerous to the employer and its ability to win a lawsuit down the road.

Some advice if you don’t want someone like me sitting across from a table taking your deposition: make sure your employees get copies of everything they sign, and that they understand what they’ve agreed to. Otherwise, how can they possibly do what you want?

Okay. Rant over. For now.