Arbitration Agreements Are Subject to Scrutiny

Article excerpt

Byline: ON THE JOB by Dan Grinfas For The Register-Guard

Question: My new employer required me to sign an agreement to arbitrate any claims that arise in the course of my employment. I've been unemployed and really need this job, so I went ahead and signed. But is it legal for an employer to make an arbitration agreement a condition of employment?

Answer: It depends. The courts have upheld an employer's right to require arbitration of disputes, but many courts have found specific arbitration agreements to be unfair and unenforceable, and employees often challenge mandatory arbitration agreements by arguing that they are unconscionable.

This is a complicated area of the law because we've had a series of sometimes-conflicting decisions by the U.S. Supreme Court and other federal courts. The 9th U.S. Circuit Court of Appeals, which includes Oregon, has in the past struck down arbitration agreements as being oppressive. Recently, the 9th Circuit has ruled that such agreements are enforceable, but that decision is under review.

The U.S. Supreme Court decided in 1991 in Gilmer vs. Interstate Johnson Co. that an employer may compel job applicants, employees and former employees to arbitrate employment-related disputes, provided that the employer follows certain guidelines. The Supreme Court also held in Circuit City Stores Inc. vs. Adams in 2001 that agreements to arbitrate claims under federal discrimination laws are enforceable. Still, employees have argued that arbitration agreements are coercive.

In May 2002, the Texas Supreme Court held in a case involving Halliburton Co. that an employee, James Myers, agreed to binding arbitration of all employment claims simply by continuing to work after the employer advised workers that it was adopting an alternative dispute resolution program. Myers hadn't signed any agreement, but the court concluded that he accepted the company's offer by continuing to report for duty after learning of the change.

The court found that Halliburton's arbitration agreement wasn't unconscionable because the company as well as the employee was bound to arbitrate claims, and the agreement provided protections for the employee, including the employee's promise to pay most of the arbitration costs and to provide the employee up to $2,500 to consult with an attorney of his choice.

In another recent case, McMullen vs. …