Supreme Court Rules in Favor of Arbitration Agreements

When you are first hired at a company, you fill out a lot of paperwork. Between the tax forms and employee benefits enrollment process, it is easy to lose track of what you are signing. Chances are, one of those pieces of paper was an arbitration agreement. While they vary from employer to employer, signing an arbitration agreement can cause complications down the road for employees with disputes.

What’s an Arbitration Agreement?

Generally, an arbitration clause means that you are required to resolve any dispute with the company through arbitration, a form of alternative dispute resolution that doesn’t involve the courts or juries.  Rather, it is a third party (i.e., the arbitrator) that “arbitrates,” or decides, everything. Whatever evidence exists is presented to the arbitrator, not a judge and not a jury. And usually, the arbitrator’s decision is not appealable. She is the last word on every claim you have.

What’s the Issue?

While this form of resolution can be helpful in some situations, more often than not arbitration does NOT favor the employee. Many of these agreements also have a class action clause, which prohibit employees from suing the company in large groups.  This takes away a powerful right for wronged consumers and employees.

At the core of this case were two opposing government regulations: 1) From the National Labor Relations Act; and 2) From the Federal Arbitration Act (FAA).

The Supreme Court’s Ruling

In the end, the Supreme Court ruled in favor of upholding arbitration agreements, stating that the National Labor Relations Act only applies to cases of unionizing and similar practices, and that the employees’ rights to gather did not trump their signed arbitration agreements.

While this ruling does not create a new policy, it does set a standard for future rulings, as Judges may be more likely to honor arbitration agreements with this Supreme Court decision on the books.

Our Advice

For employees who feel they were coerced into signing an arbitration agreement, consult a lawyer about your options. Call McNicholas & McNicholas, LLP at 866.664.3055 or visit our website for a free consultation.