Stand Alone Arbitration Agreement

Why arbitrate? Studies show that many potential jurors tend to have a „worker-friendly“ way of thinking that favors laid-off employees. Jurors tend to be emotional; Many of them believe that employees should be a company`s top priority, not its profits. Therefore, when jurors decide in favor of a plaintiff, they have allowed their emotions to dictate damages instead of the law or the facts of the case. As a result, we see large convictions in damages and punitive damages. Therefore, by „trying“ a case before an arbitrator (or panel of arbitrators), plaintiffs do not have a jury capable of exerting influence and employers can take charge of the emotional aspect of the case and reduce the potential for an arbitration award based on the jury`s sympathy. Given these risks, it is not surprising that many employers, in their employment contracts, manuals or even applications, are turning to binding arbitration rules in which aggrieved non-unionized workers agree to waive their rights to jury proceedings, remove from the legal arena all usual and legal claims, and settle these disputes in private. A thought: to ensure FAA coverage, the authors of the arbitration agreement must take steps to prevent the agreement from being a „contract of employment,“ given that these contracts are expressly excluded from FAA coverage. Two techniques can reinforce the idea that the arbitration agreement is not an employment contract: (1) ensuring that the arbitration agreement is a document in its own right and is not part of the default language in a global employment contract or personnel manual; and (2) the agreement covers all disputes between employers and employees, including those that do not relate to the employment relationship (i.e. claims for defamation after dismissal that are unlikely to be „due to the employment relationship“). For example, in a 2013 decision, Serpa v. California Surety Investigations, another second district body sided with the employer to enforce an arbitration agreement contained in a personnel manual.

The facts in Serpa were similar to those in Esparza. In Serpa, the employee received a manual on the first day of her work. The manual contained an arbitration agreement. The employee also signed a confirmation that she had received the manual, verified and understood its terms and conditions, and agreed to be bound to her. One way to help employers ensure the enforcement of their arbitration agreements is to implement the arbitration agreement as a stand-alone agreement (i.e.: Do not distribute part of a manual) to staff that requires the employee`s signature that documents the employee`s acceptance of the contractual offer. If the arbitration agreement is completely separate from the manual, it is less likely that the exclusions of liability contained in the manual will affect the application of this agreement. . .

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