Imagine this scenario. You have been hired for a new job in Texas. You go in for your first day at your new job and your new employer gives you a bunch of paperwork to fill out. Most of it is run-of-the-mill stuff like tax forms and direct deposit information that you have no issue completing. I mean, you want to get paid after all. But there is one document in the bunch that you are unfamiliar with. It’s an arbitration agreement. You might be thinking . . . “What is this?” “Do I have to sign this?” “What am I giving up if I sign this?” This blog is designed to give you the basics.
The Basics of Arbitration
Arbitration is an alternative form of dispute resolution (ADR for short). It is a way for legal claims to be “resolved” outside of court. Arbitration agreements can allow for a legal claim to be pursued through private arbitration instead of court. But more often, arbitration agreements require employees to pursue any potential legal claims through arbitration instead of court – denying employees the right to file a lawsuit in court.
Employers seem to like arbitration for two main reasons. First, many employers believe that arbitrators will be more likely to decide in their favor than judges and especially juries. Overall, employers are most likely correct in that belief. Arbitration is often characterized as a more favorable venue for employers.
Second, arbitration is more secretive. In court, everything that is filed in a case is part of a public record and if the case goes to trial, the trial is public. Anyone who wants to watch can watch. Arbitration on the other hand keeps filings confidential and the arbitration proceeding is a closed session. Employers like this confidentiality. Indeed, employers pay a lot of money to private arbitration associations to get it.
What Employees are Giving Up
Now that you know what arbitration is and why employers often prefer it, you also already have a general understanding of what you as an employee are giving up when you sign an arbitration agreement. Essentially, you are giving up your day in court. You are giving up your right to have a trial by a jury of your peers. Instead you are agreeing that any claim covered by the arbitration agreement, which will typically be written to be as all encompassing as possible, will be subject to arbitration.
Refusing to Sign an Arbitration Agreement
If you are in a position where your employer is telling you to sign an arbitration agreement, you may understandably be leery of giving up any potential rights you may otherwise entitled to. Unfortunately, employees who are hesitant to sign an arbitration agreement may be stuck between a rock and a hard place.
Employers in Texas can require employees to sign arbitration agreements as a condition of employment. That means, if you refuse to sign, you may no longer have the job. This is especially difficult because often employees do not even know they are going to be asked to sign an arbitration agreement prior to accepting a new job and quitting their old one.
If you are faced with a situation like the one described here – you are concerned about signing an arbitration agreement – please call our office and schedule an appointment to consult with one of our Texas Employment Lawyers. We will talk through your situation and address any concerns you may have in addition to talking to you about what we could potentially do to help.
On the other hand, a lot of employees likely do not even contemplate refusing to sign an arbitration agreement. It often comes up right at the beginning of employment when most people are not thinking about any potential legal issue that may arise down the road. If you have already signed an arbitration agreement and now you have a potential legal dispute with your employer, again call our office to schedule a consult right away. We will discuss the pros and cons of your case and give you information so you can decide if we are the right attorneys for you.