Most employees do not have to deal with the terms of a contract regarding their job, but for those who do, it is extremely important to read and understand these terms. Whether it be an arbitration or non-compete clause, these terms can have a significant legal impact (Murray, 2019). While at first glance this kind of contract can appear to benefit the employer more so than the employee, in further examination, it can also be helpful to the employee as well. I say this because it allows for them to know that they have job security and detail descriptions of what is expected from them (Written Employment Contracts: Pros and Cons, n.d.) In this assignment, we will focus more on the arbitration clause, discussing whether individuals’ rights are being compromised and if government regulations could provide solutions.
An arbitration clause in an employee contract is a clause that states any conflicts or issues between the employee and employer must be settled by the means of arbitration (Clauses, 2019) As with everything, there are pros and cons with this kind of clause. Some of the positives are that arbitrations are less expensive and formal than a trial, and that decisions are made quicker. Negatives of this are that it does not allow the employee to have a jury trial and decisions are not appealable (Employment Arbitration Agreements, n.d.)
When applying these to the idea of individual’s rights, my thoughts are that some rights are being compromised, but more than that is that this process can be unfair to the employee involved and since this is forced upon them, there is not much recourse that can be done. This is because of a few factors, including: the financial burden placed upon the employee, the fact that the judgement is not appealable, and that the employee cannot have a jury trial (Mandatory Employee Arbitration Clauses: Still A Good Deal for the Employer? How Merrill Lynch is Making Employers Think Twice, n.d.).
As most corporations are multi-million-dollar entities, there is no debate to whether they have the upper hand financially in these situations. The cost of arbitration is not always extremely clear and can add up quickly. For example, an arbitrator may want a sum of money up front to take on the case and then charge per hour that the dispute takes to resolve (Arbitration Agreements, n.d.). Ultimately, this can have a negative impact on the employee, as they lack the resources like those of a corporation.
The next reason of judgements not being appealable, is something that goes against the entire legal system, as in any court trial, the final judgement can always be reviewed (Appeals, n.d.). With this being the case for forced arbitration, it essentially tells those involved that the arbitrator can never be wrong. But under regulations set by the Federal Arbitration Act of 1925, there are a few circumstances that can warrant an appeal of an arbitration judgement. These include: when the arbitrator can be proved corrupt, that evidence pertinent to the case is unheard, and if the arbitrator acted outside of their powers (9 U.S. Code § 10. Same; vacation; grounds; rehearing).
One of the fundamental rights to a United States citizen is the right to a jury trial, in both civil and criminal cases (U.S. Const. amend. VII). To be forced into a contract that prevents this right from being exercised, does compromise one’s rights. An individual should never have to waive their constitutional rights to gain employment. This a main reason that these kinds of clauses are in contracts, as a jury of citizens tend to have a negative view of a corporation and side towards the employee (Hans, 1998). With the cons of this process being mentioned, now comes the question of whether Congress should intervene or let this model continue to be.
Government regulation comes in many forms, from the three letter agencies to statutory law, these play roles in our daily lives. Now some believe that this regulation is necessary, and some believe that these harm/hinder one’s ability to live life as they please. Either way it is viewed, the dilemma of choosing to waive your rights or get a paycheck should not occur to anyone. With this belief, I do think that Congress should implement some form of law to regulate the usage of the arbitration clause in employee contracts.
Recently in Congress, there has been a bill introduced by Johnson and Blumenthal, entitled the “FAIR Act” (New Federal Legislation Seeks to Eliminate Mandatory Arbitration Agreements, 2019) The focus of this act is to eliminate the practice of forced arbitration in an employee contract, which is exactly what is needed. But it is shown that this bill only has a three percent chance of being enacted, which shows to me, that the individuals in Congress favor the side of the corporation (H.R. 1423: FAIR Act, n.d.)
Since it appears that only a few people in Congress seem to care about this subject, the American people should get involved. With the increase in corporations using this clause in their contracts, it is now as important as ever to understand how they impact an employee (Colvin, 2018) But like with most things we sign our names too, we often overlook the fine print and this cause serious headaches, especially for those who are forced into an arbitration, with no legal rights.
Murray, J. (2019) Is an Employment Contract Necessary for All Employees? Retrieved from https://www.thebalancesmb.com/is-an-employment-contract-necessary-for-employees-398617
Written Employment Contracts: Pros and Cons. (n.d.). https://www.nolo.com/legal-encyclopedia/written-employment-contracts-pros-cons-30193.html
Employment Arbitration Agreements, (n.d.) Retrieved from https://employment.findlaw.com/hiring-process/employment-arbitration-agreements.html
Clauses. (n.d.) Retrieved from https://www.adr.org/Clauses
Arbitration Agreements. (n.d.) Retrieved from https://www.workplacefairness.org/forced-arbitration-agreements#13
Appeals. (n.d.) Retrieved from https://www.uscourts.gov/about-federal-courts/types-cases/appeals
U.S. Const. amend. VII. Retrieved from westlaw.com
9 U.S. Code § 10. Same; vacation; grounds; rehearing. Retrieved from https://www.law.cornell.edu/uscode/text/9/10
Hans, P. V. (1998) The Illusions and Realities of Jurors’ Treatment of Corporate Defendants. Retrieved from https://via.library.depaul.edu/cgi/viewcontent.cgi?referer=https://www.google.com/&httpsredir=1&article=1683&context=law-review
New Federal Legislation Seeks to Eliminate Mandatory Arbitration Agreements. (2019) Retrieved from https://www.natlawreview.com/article/new-federal-legislation-seeks-to-eliminate-mandatory-arbitration-agreements
H.R. 1423: FAIR Act, (n.d.) Retrieved from https://www.govtrack.us/congress/bills/116/hr1423
Colvin, A. (2018) The growing use of mandatory arbitration. Retrieved from https://www.epi.org/publication/the-growing-use-of-mandatory-arbitration-access-to-the-courts-is-now-barred-for-more-than-60-million-american-workers/