Forced Arbitration

Forced arbitration is a form of dispute resolution that is becoming increasingly common, particularly in employment contracts. Arbitration is when two parties meet outside of a courtroom setting and try to work through their problems with the help of a third-party. While arbitration can be done voluntarily, many companies are introducing forced arbitration into their contracts. Forced arbitration means that a person agrees to give up their right to a jury trial and often their right to join in a class action lawsuit (where many people sue a company as a group for the same problem). Another problem with forced arbitration is that it typically only applies to the consumer. This means that, unlike the consumer, many companies can still choose to go to court. Arbitration can be expensive, sometimes more than typical court fees. Additionally, many companies reserve the right to choose which arbitration group they want to work with. If the company uses the same group repeatedly, it could, and often does mean that the arbitrator might be biased against the consumer, as consumers tend to lose 94% of the time in forced arbitration.

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Sample – Employment Contract:

The parties expressly agree that all disputes or controversies arising out of this Agreement, its performance, or the alleged breach thereof, if not disposed of by agreement, shall be resolved by arbitration in accordance with this section. Either party must demand such arbitration only within ___ months after the controversy arises by sending a notice of demand to arbitrate to the American Arbitration Association (the “Association”), with a copy thereof to the other party. The dispute shall then be arbitrated by a three-arbitrator panel pursuant to the Commercial Rules of the Association at the Association office in [state/place]. In the disposition of the dispute, the arbitrators shall be governed by the express terms of this Agreement and otherwise by the laws of the State of ____ which shall govern the interpretation of the Agreement. The decision of the arbitrators shall be final and conclusive on the parties and shall be a bar to any suit, action or proceeding instituted in any federal, state or local court or before any administrative tribunal. Notwithstanding the foregoing, judgment on any award by the arbitrators may be entered in any court of competent jurisdiction. This arbitration provision shall survive any expiration or termination of the Agreement.