In the evolving landscape of employment law, recent federal appeals court decisions highlight some limits on enforcement of commercial contracts’ arbitration provisions, especially when it comes to employee benefit plans.
Employers generally favor arbitration provisions in employment agreements, and for good reasons. The confidentiality of arbitration proceedings allows them to avoid negative publicity, while the possibility for faster and more cost-effective resolutions is an advantage in the face of the slow grind of the overburdened courts. In addition, arbitration provisions may include class action waivers.
Courts are supportive of arbitration generally, because it follows the Federal Arbitration Act and means less work for already backlogged courts. However, employees often feel short-changed by not having a day in court to voice their grievance.
Nonetheless, decisions don’t always turn out the way the document drafters intended.
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