Employers Can Require Arbitration of Employee Disputes | AccountingWEB

Employers Can Require Arbitration of Employee Disputes

The U.S. Supreme Court has ruled that companies can insist that workplace disputes go to arbitration rather than to court. The court said that agreements to arbitrate workplace disputes are enforceable even if a requirement to sign an agreement to arbitrate was a condition of being employed. Agreements to arbitrate are a common part of employment contracts. Such agreements enable employers to control the time and money dedicated to court proceedings.

In an arbitration proceedings, the employer and employee who are facing a dispute present their information to an arbitrator, someone not a member of the company, who renders a legally binding judgement.

Business groups are supportive of the decision. "We think that this is good for business, and we think it's good for employees, too," said Stephen Bokat of the U.S. Chamber of Commerce. Arbitration "resolves disputes much more quickly with far less cost for most parties," he said.

Employee organizations disagree, claiming arbitration generally favors employers as they get to choose the arbitrator. Also, employees are frequently required to pick up the fees of the arbitration.

The Supreme Court's decision applies only to non-union workers. In addition, a clarification was given to wording in the original 1925 arbitration ruling, explaining that transportation workers are exempt from the ruling.

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