Should You Have an Arbitration Clause in Your Employment Contract?

There is a reason that arbitration has gained a foothold in business disputes over the past 20 years, whether between employees and employers or between businesses.

The Advantages of Arbitration

Arbitration offers business owners advantages as a means of dispute resolution including the following:

Lower costs. Generally, arbitration is less expensive than litigation.

Faster resolutions. Nolo reports that a recent study done by the Federal Mediation and Conciliation Services that the average time for an arbitrated case to resolve is 475 days from filing. In contrast, the average litigated case takes 18 months to three years.

Scheduling flexibility. Flexibility exists to schedule arbitration, such as during weekends or evenings, if necessary.

Less formal rules of procedure than in litigation. Arbitration is not subject to the strict rules of evidence and procedure that a trial involves. It can help parties avoids delays, the long drawn out discovery and other tactics that drag out trials.

Privacy. Typically, parties can keep matters private, which is advantageous for companies that want to avoid bad publicity.

Two Recent Fox News Cases Where Employers Fought for Arbitration

The New York Law Journal  reported that in the recent lawsuit of July 2016 where News Anchor Gretchen Carlson sued former Fox News Chairman, Roger Ailes, she tried to avoid mandatory arbitration by only suing Ailes and not Fox News. As it turned out, the case settled outside of court for $20 million before the court ruled on Ailes’ petition to arbitrate.

In August 2016, former Fox News Anchor Andrea Tantaros sued Ailes for sexual discrimination, and Fox News filed to compel arbitration. In this case, a judge later granted arbitration in February 2017. Timing was the main reason the outcomes of the two cases differed.

Employees typically prefer a trial because juries tend to find in favor of employees. However, courts will generally grant employers’ the right to use arbitration.

Legal Representation for Business Owners

Our attorneys at Stephen Hans & Associates provide business owners with seasoned legal advice and have more than two decades of experience representing them in employment related issues.



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