Arbitration Agreement and Continued Employment Consideration: What You Need to Know
In today`s corporate world, employers have to navigate through various legal and compliance issues to safeguard their interests and protect against costly litigation. One such issue is the use of arbitration agreements in the workplace. Arbitration agreements are contracts that require employees to submit any disputes arising from their employment to an arbitrator instead of the courts.
The use of arbitration agreements has become increasingly popular among employers because it helps avoid lengthy legal battles and cuts down on legal fees. However, before implementing arbitration agreements in the workplace, it is essential to understand the legal provisions that govern these agreements.
One key consideration is the need for continued employment consideration. A continued employment consideration refers to the exchange of value between the employer and the employee. Typically, this occurs when an employee agrees to sign an arbitration agreement in exchange for being allowed to keep their job.
The continued employment consideration is critical because it ensures that the employee is not coerced or forced into signing the arbitration agreement. The employee must receive some benefit or consideration in exchange for giving up their rights, which is essentially what happens when they agree to arbitrate potential employment disputes.
The continued employment consideration must be adequate, which means that the value received by the employee must be significant enough to justify the loss of the employee`s rights. Courts have held that continued employment alone is not enough to provide adequate consideration. Instead, the employer must offer some additional benefit or opportunity to the employee.
An example of adequate continued employment consideration could be an increase in salary, a promotion, additional vacation time, or some other tangible benefit that the employee would not receive if they did not sign the arbitration agreement. Employers must be careful not to overreach in what they offer as consideration to avoid any potential legal challenges.
Another key consideration is that certain states have their own laws that require additional consideration beyond continued employment. For example, California law requires that the employer offer the employee a bonus or some other benefit in exchange for signing an arbitration agreement.
In addition to offering adequate continued employment consideration, it is important to ensure that the arbitration agreement itself is legally enforceable. The agreement must be in writing, signed by both parties, and must provide a clear understanding of the arbitration process.
In conclusion, if an employer wants to implement an arbitration agreement in the workplace, it is essential to offer adequate continued employment consideration and ensure that the agreement conforms to legal requirements. Failure to do so can result in legal challenges that may ultimately prove costly and disruptive to the employer. Working with legal counsel with expertise in employment law and arbitration can help ensure that the employer`s legal interests are protected while complying with the law.