Disadvantage of a Mandatory Arbitration Clause in an Employment Contract May Not be Enforced if…
Mandatory arbitration clauses are becoming increasingly common in employment contracts. These clauses require that any disputes arising between the employer and the employee be resolved through arbitration rather than through the court system. While these clauses may seem like a good idea for both parties, there are some significant disadvantages to consider.
One disadvantage of a mandatory arbitration clause is that it may not be enforced if the employer has engaged in fraudulent behavior or misconduct. This means that if an employer has acted illegally, the employee may not be forced to settle the dispute through arbitration. This limitation is known as the “fraud exception” to mandatory arbitration clauses.
The fraud exception can be a significant disadvantage to employers who have engaged in misconduct and are looking to avoid a costly trial. However, it is important to note that the exception is limited and not always easy to prove. To be successful, the employee must be able to show that the employer engaged in fraudulent behavior or misconduct that is directly related to the dispute at hand.
Another disadvantage of mandatory arbitration clauses is that they can restrict an employee`s ability to seek legal remedies. While arbitration can be a quicker and less expensive way to resolve disputes, it can also limit an employee`s ability to appeal the decision or seek other legal remedies. Unlike court decisions, arbitration decisions are generally final and binding.
Furthermore, mandatory arbitration clauses also tend to favor employers over employees. The clauses can limit an employee`s ability to gather evidence, limit discovery, and may not provide for a jury trial. Additionally, the arbitrator may have a conflict of interest or bias towards the employer, making it difficult for an employee to receive a fair hearing.
In conclusion, while mandatory arbitration clauses may seem like a convenient way to resolve disputes, they come with a variety of disadvantages. The fraud exception is just one example of how the clauses can be limited, and the clauses themselves can restrict an employee`s ability to seek legal remedies. As a professional, it is important to fully understand the potential disadvantages that come with mandatory arbitration clauses and to provide accurate information to readers to help them make informed decisions.