Should Arizona Companies Require Employees to Sign Arbitration Agreements?

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Should Arizona Companies Require Employees to Sign Arbitration Agreements?

The use of arbitration for employment disputes has been debated in some of the highest courts in the land recently, with two decisions handed down by the U.S. Supreme Court within the last year that held employment contracts could prohibit employees from collective arbitration (Epic Systems Corp. v. Lewis) and that contract language — not the courts — controls whether a claim must be arbitrated (Henry Schein Inc. v. Archer and White Sales Inc.).

With all this judicial activity around arbitration, Arizona employers may be considering whether requiring employees to arbitrate disputes is the correct decision for your company. 

The main reasons that you may want to require employees to arbitrate their employment disputes is that arbitration can be less expensive and quicker than litigating these disputes in court.  This is because the rules of civil procedure that govern what goes on in a courtroom does not apply to arbitration proceedings.  Discovery is much more limited, as are pre-hearing motions; typically, an arbitration matter will proceed much more quickly to a hearing on the merits. 

In addition, court dockets are generally much busier than a private arbitrator’s schedule, so an arbitration matter can be resolved faster outside a courtroom.  Plus, there is no jury in arbitration and both parties have a say in which arbitrator will hear the dispute — which employers may favor since this process can provide more predictable results, especially when the facts of the case are more complex.  And although arbitration is not automatically confidential, it can be much more private than litigation since there are no public filings.

However, arbitration is not for every situation or company.  Employees may balk at giving up their rights to a jury trial when there is an issue that may have a huge impact on their career.  In addition, there are very limited rights to appeal with arbitration — good if you win, not so good if you don’t.  Since there is limited discovery, employers may find it more difficult to properly assess the strength or weakness of their case or to have claims narrowed or dismissed altogether by pre-trial motions.  

The practical and legal considerations involved in deciding on arbitration as a process for resolving employment disputes should be discussed thoroughly with an Arizona business litigation attorney.  If you decide to proceed with arbitration, you will need to ensure that arbitration provisions in your employment agreements are enforceable.

Williams Mestaz, L.L.P., is a law firm with decades of experience in commercial litigation, including IP infringement, employee lawsuits, business divorce, aviation, and high stakes litigation. Contact us at (602) 256-9400 and schedule a time to meet with us today.

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