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Good News for Employers!

Today, the United States Supreme Court entered a common sense ruling that is good news for employers that want to resolve employment disputes in a timely, cost-efficient manner by arbitration. Although the United States Supreme Court based its decision on the plain language of the Federal Arbitration Act, the appellate court that governs Oregon and other western employers, the 9th Circuit Court of Appeals, had ruled the other way and held that claims under Federal employment statutes had to be resolved in the courts.

What this means for you is that you can require all employees and all applicants for employment agree to arbitrate employment claims rather than taking those claims to court. This is a little used but effective way to resolve employment disputes in a fair, efficient manner without the expense, delay and uncertainty of state or federal court litigation.

DO: Do adopt an arbitration program to use with your employees. Employers that do not adopt this simple strategy incur an unnecessary risk of litigation. We have an arbitration program that is ready for you to use.

DON'T: Don't put an arbitration program in your employee handbook and figure that is good enough. Most employee handbooks have a precautionary disclaimer that the handbook is not a contract. Although courts generally ignore this disclaimer, they will uphold it when an employee tries to force you to go to court rather than arbitration. Keep the handbook disclaimer and make the arbitration program separate from your employee handbook.

DO: Do include a provision in your job applications that the applicant agrees that any disputes relating to the application for employment or their subsequent employment will be resolved by arbitration pursuant to your arbitration program. We have an application form you can use that will apply your arbitration program to your job application process and protect you in a number of other ways.

DO: Do include a provision in your termination agreements with departing employees that any and all claims relating to their employment or to the scope and enforceability of the termination agreement will be resolved by arbitration pursuant to your arbitration policy. If you are not currently using termination agreements, you should. They are a fair, legal and enforceable tool. They work for Fortune 500 companies, they will work for you too. And, it just so happens that we also have a termination agreement that you can use!

I have been a big fan of using arbitration to resolve employment disputes for a long time. However, until today, the court rulings on the enforceability of these agreements have been mixed and the 9th Circuit Court of Appeals has been downright hostile. Today I can tell you with certainty that if you have employees, you need an arbitration agreement.

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