First off, this isn't legal advice and you should talk to a lawyer to look more into this.
So what is Arbitration.
It's a contract between an employee and employer. It is an agreement that you will only resolve any law suites (paycheck theft, discrimination, etc) outside of the public court system.
When do you sign this contract?
Normally during the hiring process. Normally if you don't sign it, then you don't get the job. Sometimes it is in the handbook and you sign something saying you agree with what is in the handbook. (watch out if they put in it that the terms might change and by signing you agree to all future terms)
This is why it is important to actually read any and all documents you get and have to sign.
How many jobs use this?
It's estimated about 40% of new hires have to sign this. Due to it being out of the public court system. It's about impossible to get a number on how bad this is. But from lawyers and others that deal with this. They estimate 40%. It could be far far far higher due to many employees find out after that they signed this, or maybe they signed this not knowing what it means or that workplace problems really don't happen.
Note because problems can't go through the public system. This means law makers really don't know what laws to make to protect employees (even though we know in the USA that won't happen anyways).
What happens if you refuse to sign the contract or acknowledgement page saying you agree to the terms in the employee handbook?
Normally they will fire you if you got the job or they take back the job offer. (note Do you have to sign this to be employed? below)
BELOW PART TALK TO YOUR LOCAL LAWYERS. EACH STATE MIGHT ALLOW FOR THIS OR NOT.
Some lawyers recommend cross out the bad parts, date next to it, put your initials, and see what happens. Just don't say nothing.
If it's like a handbook thing, you can sign the acknowledgment but right below your signature write something like. “I don't agree to this section on an arbitration and I don't consent to giving up my rights to pursue any case in court in front of a jury.” Cross out the page on arbitration, and initial and date next to it. Turn it in and don't say anything. They might not notice.
(Sometimes the arbitration agreement is by itself. You can sign everything but the arbitration agreement and class action waver. Return it all at once with those papers not signed. Many times HR just assumes you signed it and you're on your way)
Another thing is you can negotiate terms like better pay, or you pick the arbitrator. GET IT IN WRITING.
You can't be apart of a class action:
So if there is a class action waver (which is normal in many areas). YOU CAN'T BE PART OF IT.
So lets say if a company steals $1,000 from your paycheck. The cost of taking them to court will cost way more than any amount you would get normally. HOWEVER, if your lawyer can get a number of others who this has happened to. Then the cost gets spread out over 10 or 50 people, and it becomes far more worth it.
This means the company gets away with theft.
What is the difference between public court and arbitration?
Real quick the judge for an arbitration case is called an arbitrator
| Public court | Arbitration | |
|---|---|---|
| Judge | Paid by tax dollars | Paid by the company that you are fighting against (so it gets into a person investigated themselves and found no wrong doing) Also the company tends to pay the judge hundreds to thousands of dollars per hour. |
| A judge isn't allowed to have a conflict of interest | Conflict of interest happens ALL THE TIME. | |
| Judges are randomly picked and can't have conflict of interest | Lawyers pick the arbitrator. If they can't agree then a random one is picked from a pool. HOWEVER, the far far far far majority of them or more for defense (company) vs employee. | |
| Discovery | Judges must follow the fairness rules in gathering evidence and so on | Your lawyer could be extremely restricted on gathering evidence and so on. |
| Location | At a courthouse | Normally a lawyers office or a meeting room |
| Who judges | Jury of your peers | The arbitrator (the one paid by the company and can have extreme conflict of interest) is the sole decision maker |
| Able to appeal a bad decision | You can appeal | You can't appeal |
| Wining | Normally you get a higher payout in public court | You normally get a lower payout |
If you haven't caught on, this system rewards arbitrators that rule to the company. It hurts those who rule towards the employee. The reward is hundreds to thousands of dollars per hour. The payment comes from the company.
If the arbitrator rules for the employee, then it is a STRONG change they will be black listed from that company and all other law firms.
There is a story of one ruling in favor of an employee for over a million dollar reward. That arbitrator NEVER worked in it again because NO ONE would agree to use him.
You get far less from winnings. For example, there is a story where someone was suing for millions. The arbitrator awarded the person. They awarded them $500 where in the public court system it would've easily been way over a million.
Do you have to sign this to be employed?
Some states you don't. CA for example has a laws which can massively help you. Talk to a local lawyer.
Can you get out of this?
Yes, if you quit.
Yes if it's sexual harassment
Yes if it's securities fraud
Yes if it's unconscionable (each state is different, but normally this means if there was 1 sided terms. Like if the employer wanted too much then they lose everything. Talk to a lawyer about this.)
Renegotiate
You can talk to a lawyer and sometimes they can get you out of this.