Understanding Arbitration Clauses in Employment Agreements
Demystifying Employment Arbitration AgreementsIn the realm of employment agreements, the mention of an arbitration clause is quite common. Even if you don't have a formal contract, your employer might require you to sign or acknowledge an arbitration or dispute resolution policy as part of your onboarding process.
The reality is that you might not have much room to negotiate when it comes to these clauses, but it's still crucial to grasp their implications and the extent to which they can be enforced. Defining ArbitrationArbitration, a form of alternative dispute resolution, is an alternative to taking a claim to court. It's essential to distinguish arbitration from mediation, as they are not the same. Arbitration resembles a trial, but it occurs in a private setting before one or more arbitrators, who may or may not be retired judges.
From an employee's perspective, arbitration has its advantages and disadvantages. On one hand, it's not a public proceeding, which means that you don't have to worry about outsiders learning about your dispute or its details. On the other hand, it comes with costs, as the parties involved usually share the expenses related to the arbitrator(s). This is an out-of-pocket expense you wouldn't incur if you opted for a court complaint. Additionally, arbitration typically limits the discovery process, which can be a disadvantage, especially in employment cases where employers often have greater access to information than employees. Enforcing Arbitration AgreementsIn general, agreements to arbitrate are legally binding and enforceable. The Federal Arbitration Act promotes arbitration as a private, streamlined process that reduces the burden on the court system. While there are some exceptions to this rule (which we'll discuss shortly), signing or accepting an arbitration provision often means you're relinquishing your right to a trial before a jury should employment-related claims arise.
Arbitration Agreements and Employment Discrimination ClaimsThere's an exception to the enforceability of arbitration agreements when it comes to employment discrimination claims. Although an arbitration agreement can prevent you from pursuing a case in court, it can't deprive the Massachusetts Commission Against Discrimination (MCAD) or the federal Equal Employment Opportunity Commission (EEOC) of their jurisdiction to enforce anti-discrimination laws. This means you can still file a discrimination charge with the MCAD or EEOC, even if you've signed an arbitration agreement. However, you'll need to remain in the agency where you initially filed your claim; you won't have the option to transfer the case to court.
Arbitration Agreements and Sexual Harassment ClaimsRecent federal legislation further limits the enforceability of arbitration agreements, specifically concerning sexual harassment or sexual assault claims. Since sexual harassment is a form of discrimination, you're still required to file with the MCAD or EEOC first, even if you have an arbitration agreement in place. However, these claims fall outside the scope of the arbitration agreement, allowing you to ultimately bring your case before a judge or jury in civil court.
Digitally Signed Arbitration AgreementsWhile it's relatively straightforward to spot an arbitration clause in a written employment agreement, it can be trickier when an employer requires you to accept an arbitration or dispute resolution policy digitally during onboarding. You might be presented with multiple documents, some of which don't directly show what you're accepting, making it a challenging situation.
The enforceability of these digitally signed agreements is still a subject of debate. The Massachusetts Supreme Judicial Court has recently outlined a two-part test that must be met. First, the employer must have provided "reasonable notice" of the agreement's terms. Second, the employee must have shown a "reasonable manifestation of intent" when clicking the acceptance button. "Reasonable notice" doesn't necessarily mean that the entire agreement must be visible on your screen before you accept. However, there should be a clear way for you to access and review the document, with language indicating that you are accepting an available contract. Clear hyperlink colors and language in the acceptance button can support the argument that you had "reasonable notice." The "reasonable manifestation of assent" is typically fulfilled if the button you're clicking says something like "I agree" or "I accept." More indirect language, such as stating that submitting electronic documents equates to agreeing to all of the employer's policies, may face closer scrutiny. Understanding these facets of arbitration clauses and agreements can help you navigate the complex terrain of employment contracts while staying informed about your rights and options. |
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Meet Our Employment Lawyers
Emily Smith-Lee is the owner and founder of slnlaw. She is a 1996 graduate of Boston College Law School. She was previously a partner at the Boston office of a large international firm, where she worked for thirteen years before starting the firm that became slnlaw in 2009. She has been recognized as Massachusetts Superlawyer each year since 2013, and in 2018 earned recognition as one of Massachusetts Lawyers Weekly's Lawyers of the Year. She has written a book on employment law: Rules of the Road, What You Need to Know About Employment Laws in Massachusetts. Along with the rest of the slnlaw team, she has helped hundreds of clients navigate, negotiate, or defend against the terms of their employment agreements, including non competes, non solicitation agreements, employment contracts with intellectual property provisions and other restrictive covenants, and executive employment agreements.
Rebecca Rogers: Rebecca is a 2006 graduate of Boston College Law School, and has worked with slnlaw since 2013. She previously worked as an intellectual property litigation attorney for Fish & Richardson in Boston, Massachusetts, and clerked for the Massachusetts Supreme Judicial Court. Rebecca has helped many clients understand and evaluate their non compete agreements and develop strategies for defending against non compete enforcement and negotiating resolution, and understand and navigate other employment contracts.
Jenna Ordway: Jenna is a 2013 graduate of Quinnipiac Law School, and also earned an LLM in Taxation from Boston University in 2015. She has been affiliated with slnlaw since 2011, first as a law clerk and then as an attorney. Jenna has been recognized since 2019 as a "Rising Star" by Massachusetts Superlawyers. Jenna works with employers to develop reasonable and enforceable employee agreements, including non competes, non solicitation agreements, executivev employment agreements and incentive agreements. She has also helped employees understand and evaluate their non compete agreements and develop strategies for defending against non compete and non solicitation enforcement and negotiating resolution.
Elijah Bresley: Eli is a 2014 graduate of Seton Hall Law school, and has worked with slnlaw since 2020. He previously worked for a boutique employment law firm outside of Boston, and then for the Labor and Employment department of a large Boston firm. He also spent a year clerking for the judges of the Superior Court in Hartford, Connecticut. Eli has helped clients both evaluate and negotiate their employment agreements, including non competes, non solicitation agreements, employment contracts with intellectual property provisions and other restrictive covenants, and agreements requiring employee payback of retention bonuses or training expenses. Eli has also defended claims against employees based on employment contracts in state and federal courts.
How We Can Help
Our team of legal experts is here to guide you through the complexities of arbitration agreements, ensuring you understand your rights and can make informed decisions regarding your employment contract. You can use the button below to schedule a call back from a member of our team, or give us a call at 781-784-2322.
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