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What is forced arbitration, and why does it matter?

On Behalf of | Jun 23, 2016 | Employment Disputes |

When you reviewed your employment contract, you probably had to sign something that prevented you from going to court in the case of any type of employment dispute in Minnesota. This clause is often referred to as forced arbitration. Therefore, it is important that you understand what it is before you agree to it.

According to the Alliance for Justice, any dispute settlement that is handled by a third party outside of court constitutes arbitration. Many employment contracts today now include a clause that will force you into arbitration rather than seeking justice in front of an impartial court.

The problem lies in that outcomes in arbitration are less friendly to employees than litigation when there are employment disputes. This means that if you were to face discrimination or some other problem at work, rather than being able to sue, you would have to go into arbitration. Although in theory, arbitration is meant to be handled by an objective third-party, corporations tend to have control over selecting the arbitrators. This gives the corporation yet another leg up over you in the case of a dispute.

With the odds against you, you most likely would end up with a less favorable outcome – regardless of how great your lawyer is. It also means that if you and the rest of your coworkers wish to come together for a class-action lawsuit against your employer, you will be unable to do so. This is because class action lawsuits are often forbidden in forced arbitration clauses.

Forced arbitration is usually found in the fine print of the contract, so you may not realize you have signed away your right to litigation until it is too late. This is one reason it is important to take the time to thoroughly read through your contract before you sign it. This information is only intended to educate and should not be interpreted as legal advice.



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