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Article
Protecting Yourself --
Every Employer Should Have An Arbitration Program
On November 1, 2001, an El Paso, Texas jury returned a verdict of $30,475,000 against former employer Toro Company for terminating
long term employee Steven Jones allegedly in retaliation for filing a workers� compensation claim.
To curb the stress, costs, and bad publicity of a typical lawsuit, many employers are turning to arbitration as a means of resolving employment-related disputes. Arbitration is a method of dispute resolution in which both sides involved agree to submit employee/employer disputes to a neutral third party that renders a binding decision.
Advantages Of Mandatory Arbitration Agreement
Before hiring an employee, an employer can, in effect, condition employment based on signing a mandatory arbitration agreement that will require disputes between the employer and employee to be resolved by a neutral third party arbitrator. This agreement will eliminate the need for court intervention. The following are just a few of the many advantages of settling employee/employer disputes through arbitration:
- Avoid steep legal fees;
- Resolve disputes in a fraction of the time that it takes to even get a lawsuit to trial. (This time savings translates directly into cost savings for the employer);
- Reduce exposure to back-pay liability due to faster resolution of claims;
- Choose an arbitrator who is familiar with the industry in which the business operates;
- Choose a meeting time and place that is convenient for them;
- Minimize compassion for the employee. (This compassion is often what prompts juries to award those
ever-increasing multi-million dollar verdicts against employers);
- Ensure confidentiality, which protects an employer from unwarranted public disclosure, and unwanted loss of customers due to bad publicity; and
- Provide closure because arbitration awards can only be appealed in extraordinary circumstances.
As you can see, the advantages of arbitration over litigation are numerous, and these advantages of arbitration can be guaranteed if an employer has its employees sign mandatory arbitration agreements.
Take for example the Toro case. For fifteen years, Steven Jones worked as a process technician for Toro Company. He filed a workers� compensation claim after an on-the-job injury, and Toro terminated him shortly thereafter.
Subsequently, Mr. Jones filed suit against Toro alleging that he was terminated in retaliation for filing a workers� compensation claim. Toro argued that it terminated him for failing to take a drug test the day he got injured. However, Mr. Jones� attorney provided evidence that demonstrated that numerous Toro employees who had been injured in the past and did not take drug tests were not fired.
On November 1, 2001, an El Paso, Texas jury returned a verdict in favor of Mr. Jones and awarded him $25,000.00 for past-lost benefits, $150,000 for future-lost benefits, and $300,000 in damages for mental anguish. Additionally, the jury awarded Mr. Jones $30 million in punitive damages. Since the average jury award exceeds one million dollars,� the bulk of which is punitive damages, it makes sense to have an employee sign a mandatory arbitration agreement, which will take the decision out of the jury�s hands and place it in the hands of an arbitrator.
Binds Only Those Parties Who Agree
What is important to remember about mandatory arbitration agreements is that they bind only those parties who enter into them. This issue was recently clarified in EEOC v. Waffle House,� where the United States Supreme Court decided that the Equal Employment Opportunity Commission (�EEOC�) could seek victim-specific relief on behalf of a claimant, despite the presence of an arbitration agreement between an employer and employee.
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�Since the average jury award exceeds one million dollars, the bulk of which is punitive damages, it makes sense to have an employee sign a mandatory arbitration agreement?� |
Although this ruling may seem to undercut the viability of arbitration agreements in discrimination/harassment disputes, the Waffle House decision only affects those cases in which the EEOC decides to litigate. Remember EEOC litigates only 1% of all job bias cases filed with the agency. In most cases, it issues employees a right to sue notice empowering the employee to bring lawsuits against the company. The Waffle House decision will not affect 99% of all employment litigation cases. Most importantly, this decision only affects those cases filed with the EEOC.
Arbitration Is Right For You
The Monty Law Firm is committed to providing defense to employers for all employment and labor related disputes. For less than the cost of one hour of attorney�s time, Assist members can have an arbitration program tailored to their companies� needs. If you should have any questions or concerns regarding mandatory arbitration agreements, please contact our firm, and we will be happy to assist you. (810 Highway 6 South, Suite 110, Houston, Texas 77079; 281-493-5529;
[email protected]).
Footnotes:
1 See Legal Notes-1998 Employment Law Jury Verdicts (http://www.pihraonline.org/pihrascope/0299/dept3.htm).
2 122 S.Ct. 754 (2002).
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