Mandatory Arbitration Agreements

What Employers Need To Know About Mandatory Arbitration Agreements

by | December 10, 2019

Avoiding employee disputes and lawsuits is the goal of employers, but even effective best practices won’t reduce all risks. So how do employers avoid the inevitable cost of employee disputes and lawsuits? Enter mandatory arbitration agreements, which prevent employee disputes from going to court. These agreements are typically part of employment agreements or as separate agreements between employer and employee.

Though the use of these agreements is controversial and can anger employees, the Supreme Court recently gave them the SCOTUS stamp of approval. However, there is some confusion for employers, as some states, including Washington, have passed laws that may help employees avoid the use of mandatory arbitration agreements. Below is what employers need to know about mandatory arbitration agreements in Washington.

So, who has the authority on mandatory arbitration agreements?

A good rule of thumb is, when federal and state laws conflict, federal law (usually) wins out. But, approach with caution, because states are coming up with creative ways to bypass federal laws without directly conflicting with them.

One example takes place here in Washington. Senate Bill 6313 passed this year that invalidates any employment contract requiring an employee to resolve workplace discrimination claims through arbitration. Washington argues that no conflict exists between state and federal law due to the limited discrimination-only scope. Not so fast, Washington. King County Superior Court stepped in and held that this law violates the Federal Arbitration Act (FAA), which gives employers the right to require arbitration for employment disputes.

The King County Superior Court ruling is a big win for employers. However, the case is working its way through the court system and could be appealed and overturned in the future. If this sounds confusing, you are not alone. There are solutions and steps to take to help you navigate your business through the fast-changing world of employment law:

  • Stay up to date with current federal and state laws via legal alerts.
  • Consult with your business attorneys to ensure a clear understanding of the requirements as an employer
  • Review your employment contracts regularly to make sure they are compliant with all applicable laws.

Enlist Help

Equinox attorneys stand ready to help employers consider, design, and implement an arbitration solution with class and collective action waivers. Contact us today and we can provide any assistance to you or your organization.