Articles Posted in Business Law

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.
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