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What is an Arbitration Agreement?

Arbitration agreements are a commonplace fixture in the modern work environment. To avoid lawsuits and the cost of going to court many businesses usually prefer going through the arbitration process.  An arbitration agreement is a written contract that involves an individual submitting their claims to a private arbitrator for a resolution outside of the court. The arbitrator is paid by one or both of the parties involved. In most cases, settlements involve the defendant paying the plaintiff. There are different types of settlement payments and each carries its own nuances.

How is Arbitration Used?

The Economic Policy Institute has collected data in a survey showing that 56.2% of employees are subject to mandatory employment arbitration procedures. This means that more than half of American employers implement forced arbitration, arbitration imposed as a condition of employment. This means that if a worker is not willing to accept an arbitration clause in their contract, they must seek another job. There are voluntary uses of arbitration as well, examples include arbitration between Unions and management and arbitration to settle commercial disputes. In both cases, arbitration’s main purpose is to function as an alternative dispute resolution or ADR and thus avoid the costs and publicity involved with a pubic court.

How is Arbitration enforced?

In cases of forced arbitration, workers can be fired if they don’t agree to arbitration with their employers. The Federal Arbitration Act or FAA, which passed in 1925, states that arbitration agreement is enforceable unless they violate the general law of contracts for the state In which the action takes place.

Arbitration can be a complex and difficult issue to face alone, thus we recommend that seek out legal counsel when confronted with an issue regarding an arbitration agreement.

PereGonza The Attorneys can offer a free consultation and give you insight on what the best course of action for what your specific case may be. Fill out our personal intake form for more information.


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