The benefits of mandatory arbitration agreements

| Mar 12, 2018 | Insurance Law

It may go without saying that businesses want to stay out of court, especially when it comes to defending against employee-based claims. Whether it is a dispute over wages or work conditions, or even sexual harassment and discrimination claims, protracted litigation not only detracts from a business’ bottom line, it could also harm future business relationships.

These arguably are reasons why more employers are including mandatory arbitration agreements into their employment contracts. An example of such a clause recently made headlines when such agreement prevented an employee from New Orleans from pursuing sexual harassment and discrimination claims against Waffle House in court.

In fact, the number of non-union, private sector employees being subject to mandatory arbitration has increased dramatically over the last decade. Arbitration is favorable for employers because disputes tend to be resolved faster, arbitrators are not bound by the rules of civil procedure and narrower limits on discovery may be made during discovery, which potentially lowers litigation costs.

The results of arbitrated cases are generally confidential and difficult to appeal. Further, the payouts from arbitrations are commonly much lower than jury awards, which is why plaintiff’s attorneys are less likely to take a case to arbitration. For employers, providing a cost effective resolution to sensitive employment disputes is a critical aspect of managing a business.

Indeed, every business is different and every employee-based dispute has its unique circumstances, but arbitration provides a reliable option for resolving them. If you have questions about crafting or interpreting a mandatory arbitration agreement, an experienced insurance defense attorney can advise you.