Should companies need their workers to sign an Arbitration Agreement? Can companies compel workers to sign an Arbitration Agreement?
What you will discover:
What does an Arbitration Agreement serve?
Is it legal for me to have an employee sign an Arbitration Agreement?
What happens if an employee refuses to sign an Arbitration Agreement?
Are Arbitration Agreements executed online legally binding?
Learn more about Arbitration Agreements.
Employers often require new workers to evaluate and comprehend their company’s rules, read and occasionally sign the Employee Handbook, and attend training. An Arbitration Agreement is another document that you, as an employer, may want to examine. While it is true that Arbitration Agreements are only applicable if there is an employment dispute, if properly enforced, this sort of agreement may save your company substantial time and legal expenses.
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Table of Contents
What does an Arbitration Agreement serve?
An Arbitration Agreement is a legal contract that compels the parties to settle any issues via arbitration rather than filing a typical lawsuit. Arbitration is comparable to a trial, except instead of a judge or jury, a neutral third-party evaluates the issue. Arbitration is a confidential procedure.
Arbitration is a popular means of resolving disputes since it is frequently quicker, less expensive than going to trial, and less formal than presenting the case in court. For example, unless the parties agree otherwise, the rules of evidence do not normally apply in arbitration. Because arbitration is private, there is no public record of the filings or the facts and legal issues at issue, which might be useful in certain cases for both the employer and the employee.
Arbitrators are chosen by the parties that agree to resolve their issues via arbitration. This is especially useful if you know your business is very technological or difficult, and you need someone with specific understanding.
Is it legal for me to have an employee sign an Arbitration Agreement?
As part of the onboarding process, you may absolutely request that your employee sign an Arbitration Agreement. While an employee cannot be forced to sign an Arbitration Agreement, you, as the employer, have the right to refuse to hire an employee who refuses to sign one. In certain ways, the arbitration agreement might then become a contractual requirement.
If the employee refuses to consent to arbitration, you may elect to revoke the job offer. However, if you are recruiting an employee under an Employment Contract rather than a “at-will” employee, you should ensure that the requirement does not infringe on your contractual rights. You could wish to add wording in the Employment Contract stating that an Arbitration Agreement is necessary for a service contract.
What happens if an employee refuses to sign an Arbitration Agreement?
You cannot compel your employee to sign an Arbitration Agreement as an employer. You have two alternatives if the employee refuses to sign it:
Allow their job to continue, understanding that any disagreements will be resolved in court rather than via arbitration.
Cancel a job offer or end employment
An Arbitration Agreement might be favored by certain companies, but it may not be a deal-breaker for others. In other cases, companies may compel all workers to sign an Arbitration Agreement as a condition of employment.
Be warned that not all arbitration agreements will be upheld in court if they are challenged. For example, it may be stated wrongly, be prejudiced favor the business, or require the employee to bear an excessive amount of the expense. In such cases, the employee may file a lawsuit in court to dispute the agreement and seek that their case be heard by a judge or jury.
Are Arbitration Agreements executed online legally binding?
In the great majority of cases, an electronic signature will have the same power and effect as a handwritten signature. While there may be instances when an electronic signature is not an option, these are uncommon.
Learn more about Arbitration Agreements.
Arbitration agreements may be an excellent approach to lower the expense of settling employee conflicts. While you cannot compel your workers to sign anything, you may exclude existing and potential employees who refuse to sign an Arbitration Agreement.
Consider seeing an attorney if you have any concerns concerning the legal issues of Arbitration Agreements. They will be able to assist you in weighing the benefits and drawbacks of these and other employment-related agreements.
