Advocating For California Employee Rights

Understanding your employment contract’s arbitration clause

On Behalf of | Aug 22, 2021 | Employment Law

There’s a lot of competition for jobs in some sectors here in Los Angeles. This leads many employers to ask their workers to sign employment contracts before they take on their roles.

Your employment contract likely states that you’re required to first use arbitration in resolving differences with your employer before you file a lawsuit. You may find it helpful to learn what arbitration entails if a dispute has occurred between you and your employer and pursuing this type of alternative dispute resolution (ADR) is warranted.

Employers often include clauses requiring employees to pursue arbitration to keep their employees’ grievances from becoming public. Arbitration proceedings occur behind closed doors.

What is forced arbitration?

Arbitration allows you and your employer to come to the table and discuss your differences in front of an unbiased third party to try and reach a legally binding resolution on an issue.

Any contractual obligation that allows one party, such as an employer, to require another party to do something rises to the level of a “forced” action. If your employment contract requires you to participate in arbitration to resolve a dispute, it’s considered “forced arbitration.”

Is it common for employees to win at arbitration?

Statistics published in 2015 by the Economic Policy Institute (EPI) showed that employees required to pursue forced arbitration only won 19.1% of the time. Employees tended to have a much higher success rate when litigating their cases. That same data shows that 57% of state litigants won their cases, whereas 36.4% of federal litigants did.

Comparing arbitration to litigation may be in some ways like comparing apples and oranges as each scenario has different statutes of limitations, evidentiary processes, burdens of proof and due process requirements. You must keep in mind that once you settle your case in arbitration, you can’t have appellate judges hear your case.

You should carefully weigh the pros and cons of signing any contract that contains an arbitration clause in it. If a conflict arises and you find yourself needing to arbitrate your matter, then you’ll want to have a clear understanding of arbitration and your rights in the process.