Unconscionable Arbitration Clauses: Be Careful What You Include

more+
less-

Many employers lawfully require all employees, as a condition of employment, to arbitrate any disputes arising out of the employment relationship. Typically, such arbitration agreements include claims for wrongful termination, discrimination or harassment, wage and hour violations and the like, but they exclude workers’ compensation claims. By definition, the arbitration agreement forces the employees to give up a jury trial, although in many cases the employer agrees to pay the full cost of the arbitration. More recently, employers have added a clause by which employees waive the right to sue collectively in a class action, a controversial provision that will be the subject of a future post.

Can an employee who has been forced to agree to arbitrate claims ever get out of that agreement and bring an action in court before a judge and jury? The answer is yes, in the limited circumstance that a court holds the arbitration agreement to be unconscionable. What does that unwieldy word mean? It means simply that a court has determined that a contract is so overly harsh or one-sided that it cannot be enforced. Courts look to both procedural unconscionability—how the contract was formed—and substantive unconscionability—the actual terms of the contract—to determine if it should be enforced.

Please see full alert below for more information.

LOADING PDF: If there are any problems, click here to download the file.

Written by:

Published In:

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© JAMS | Attorney Advertising

Don't miss a thing! Build a custom news brief:

Read fresh new writing on compliance, cybersecurity, Dodd-Frank, whistleblowers, social media, hiring & firing, patent reform, the NLRB, Obamacare, the SEC…

…or whatever matters the most to you. Follow authors, firms, and topics on JD Supra.

Create your news brief now - it's free and easy »

All the intelligence you need, in one easy email:

Great! Your first step to building an email digest of JD Supra authors and topics. Log in with LinkedIn so we can start sending your digest...

Sign up for your custom alerts now, using LinkedIn ›

* With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name.
×
Loading...
×
×