The Enforceability of Arbitration Agreements

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gavel-952313-mThe Trend: Mandatory Arbitration

As a physician employee, you might be aware of the “arbitration agreement” that you signed with your employer upon your hiring. In the employment context, an arbitration agreement may in the view of your employer be a more efficient way to privately resolve legal disputes associated with your employment than litigation is. Therefore, many physician employers will include in their proposed employment agreement a mandatory arbitration provision. Arbitration agreements are facing backlash however, as critics claim that employers insisting on mandatory arbitration do not have incentives to obey labor laws.

Georgia Physician Employment Lawyers

Critics of arbitration agreements state that these provisions are a way for employers to compel an employee into waiving valuable legal rights, including the right to a jury trial. Mandatory arbitration provisions are often discussed and scrutinized by courts and legislators.  Some arbitration clauses have been held unenforceable by courts. In Epic Systems Corp. v. Lewis, for example, the arbitration clause at issue barred employees from suing their employers. In that case, the Court enforced the company’s mandatory arbitration clause, favoring corporations and employers, after employees banded together to sue their employers for damages because they were underpaid. Since the ruling, more questions have arisen regarding the enforceability of mandatory arbitration agreements. More cases have come forth of employees having disputes that fall under the Fair Labor Standards Act (FLSA), The Americans With Disabilities Act (ADA), The Family and Medical Leave Act (FMLA) and Title VII of the Civil Rights Act. Now, since the Epic Systems ruling, it is more difficult for employees to contest mandatory arbitration provisions that (in the view of some legal experts) might make it harder to bring certain types of legal claims against an employer.

Conflicts regarding the fairness of mandatory arbitration are continuing to be discussed by legislative bodies. Recently, the Forced Arbitration Injustice Repeal (FAIR) Act was introduced, stating “no predispute arbitration agreement or predispute joint-action waiver shall be valid or enforceable with respect to an employment dispute, consumer dispute, antitrust dispute, or civil rights dispute.” Whether or not this legislation will pass depends on whether the House and Senate can work together to push it forward.

What now?

There are many reasons that an employee may feel uncomfortable with an employment agreement that requires arbitration, including a perception that an arbitrator might be unduly influenced by compensation received from the employer on a regular basis in handling such disputes.  An employee bound by a mandatory arbitration agreement will typically be compelled to arbitrate if he or she attempts to litigate claims subject to the agreement, depending on the claim and the nature of the dispute. This reality may diminish the employee’s bargaining power once an employment issue exists with the employer. In limited circumstances, employees can take steps that may enable them to avoid being bound by the agreement. State laws vary on whether existing employees should be bound by new agreements, or if new consideration for an amended agreement should be required.

Hamil Little PC

We advise and represent hospitals, medical practices, physicians and other healthcare providers. If you have questions about this post, contact us at (404) 685-1662 (Atlanta) or (706) 722-7886 (Augusta), or by email, info@hamillittle.com. You may learn more about our law firm by visiting www.hamillittle.com.

 

** Disclaimer: Thoughts shared here do not constitute legal advice. Please consult with an attorney to discuss your legal issue.

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