Can employees be forced to arbitrate their claims?

Can an employer demand that employees give up their right to go to court with employment disputes, and instead submit any case to arbitration? Many companies have been doing so lately. They often prefer arbitration because it is quicker, less expensive and more private.

However, it’s still unclear whether – and when – employers can legally do this. One result has been that many employees are now going to court to resolve the question of whether they can go to court. Here are three of the latest cases that have addressed this issue:

► A union can agree that workers must arbitrate age discrimination claims as part of a collective bargaining agreement, the U.S. Supreme Court ruled in a 5-4 decision.

The employees in this case filed grievances about age discrimination. When the union declined to pursue their claims, they sued under the federal age discrimination law.

But the Supreme Court said the employees had to go to arbitration instead of court.

“There is no legal basis for the Court to strike down the arbitration clause…which was freely negotiated by the union,” the Justices wrote.

► A company can put an arbitration clause in a job application form, such that any employee who signs the application also legally agrees to give up the right to sue in court, the California Court of Appeal has ruled.

The job application in this case stated, “I further agree, in the event I am hired…all disputes…whether during or after that employment, will be submitted to binding arbitration.”

An employee argued that this wasn’t a fair contract because the parties didn’t have equal bargaining power.

But the court said the application was fair and amounted to “a valid, mutual obligation to arbitrate.”

► However, an employer who wants to require arbitration has to be willing to pay the full cost of the arbitration itself, according to the Alaska Supreme Court.

The Alaska case involved an employee at an auto dealership who sued for unpaid overtime. Even though the employee had signed a contract agreeing to arbitrate any disputes, he argued that that it was unfair because it required him to pay at least half the cost of the arbitration.

The court agreed with the employee. It also said the contract was unfair because it allowed the dealership to appeal from awards over $50,000, but didn’t allow the employee to appeal from smaller awards or from awards in favor of the dealership.