Employers commonly require that potential employees sign agreements waiving their right to jury trials and, instead, requiring them to arbitration all disputes arising from their employment. New Jersey and Federal law supports enforcement of arbitration agreements.
Arbitration agreements are controlled by the Federal Arbitration Act and the New Jersey Arbitration Act. In arbitration, a dispute is submitted to a neutral third-party who makes a binding decision.
Although arbitration can be cheaper and faster than litigation, it is more advantageous to the employer. First, a decision is made by a single person (usually a lawyer or a retired judge) instead of a jury, which might be more sympathetic to an employee (especially since the arbitrator will know that the employer drafted the agreement and chose arbitration). In addition, discovery of information between the parties is significantly limited, favoring the employer which has most of the evidence, especially in a suit for wrongful firing. It is also difficult to appeal an arbitration agreement.
It is important to read employment documents presented carefully. People presented with arbitration agreements should seek an attorney’s advice because courts generally enforce arbitration agreements, even though they appear to be contracts of adhesion. A contract of adhesion is an agreement that is presented on a take-it-or-leave-it basis by a party with dominant bargaining power. Normally contracts of adhesion are unenforceable. However, in 2002 the New Jersey Supreme Court in Martindale v. Sandvik, Inc., ruled that employment agreements requiring arbitration are not contracts of adhesion.
New Jersey employers, however, may lose the right to compel arbitration if they wait too long to act. For example, in Farese v. McGarry, the court ruled that an employer can waive arbitration by failing to assert it as a defense and instead litigating the dispute in court. Waiver can be inferred from an employer’s actions. Therefore, New Jersey employers intending to arbitrate should notify their attorneys that an arbitration agreement exists immediately after being sued.
In addition, New Jersey employers must carefully draft arbitration agreements. New Jersey’s Supreme Court explained that arbitration agreements must be clear and unmistakable. Any ambiguity will typically be held against employers. In addition arbitration agreements must explicitly state which issues will be arbitrated and that the right to a jury is waived. Employers should consult with attorneys before implementing arbitration as a requirement.
McLaughlin & Nardi’s attorneys regularly represent both employers and employees in court and in arbitration, drafting enforceable arbitration agreements, and litigating disputes about the enforcement of arbitration agreements. Our attorneys have extensive experience representing employers and employees in all aspects of labor and employment law. To learn more about what we can do to help, please visit our website or contact one of our lawyers at (973)890-0004.