Arbitration can be an efficient and cost-effective method for
resolving workplace disputes. The benefits of arbitration over
litigation can include confidentiality during the process, reduced
publicity, lower legal costs, avoiding an irrational jury decision,
and the potential to avoid class action claims.1 However, there are some key rules to
follow if an employer wants to implement an enforceable arbitration
agreement.
Knowing and Voluntary Assent
The principles of contract law will apply in determining whether
an agreement to arbitrate is valid. Under those principles,
arbitration agreements "must be the product of mutual
assent" such that the "parties have an understanding of
the terms to which they have agreed," and "[a]n effective
waiver requires a party to have full knowledge of his legal rights
and intent to surrender those rights." In addition, employees
must receive notice of the arbitration agreement and enter into it
"knowingly and voluntarily."
