Fight a Mandatory Arbitration clause in new employment contract?

February 25, 2013 6:14 PM

Looking to start a new job that looks otherwise awesome. But the employment contract has an arbitration clause in it and I'm hesitant. Ontario.

On the one hand, I don't anticipate any problems with this company and am hesitant to cause further troubles down the line. All the current employees seem happy and well-adjusted.

But on the other hand, mandatory arbitration feels a little skeezy, especially since the contract states I would pay half of the cost of arbitration. Thankfully, Ontario's Arbitration Act states that a court will appoint the arbitrator, so I don't have to worry about being subjected to an arbitrator that will by necessity favour my employer, but there's no appeal to arbitration, no "discovery" phase where my employer can be compelled to provide evidence, and no review of the decision to ensure that the relevant laws are followed or the decision is fair. Heck, the arbitrator doesn't have to be aware of or follow law at all when making their decision.

I like this place, and I'd really like to work there but I don't need the job - in fact I have other interviews I'll have to cancel if I decide to accept the contract.

I guess I'm mainly wondering - am I completely off on arbitration? Are there benefits to me, the employee, that I'm not seeing? Or should I actually make an issue of this?

posted by Imperfect to law & government (13 answers total)

Arbitration is generally cheaper for both sides of a dispute, so it's not entirely true that it's a bad thing.
posted by dfriedman at 6:18 PM on February 25 [1 favorite]

If you're in a strong bargaining position, why not add some lines of your own to the agreement, allowing those things you think important, and send it back? If this company is offended by your desire to legally protect yourself, it doesn't bode well for them.
posted by emjaybee at 6:28 PM on February 25

I'd really like to work there but I don't need the job - in fact I have other interviews I'll have to cancel if I decide to accept the contract.

Then there's no reason not to say "This all looks great, except for this bit here..." You can ALWAYS negotiate - but do be willing to accept that the other party might not budge. Personally, I'd not sign that.
posted by blaneyphoto at 6:29 PM on February 25

I am not familiar with Canadian law, but: arbitration is a very structured, formal process, and a hell of a lot cheaper than regular litigation. It's also a lot faster. Hence, it's become a lot more common in employment (and other) contracts.

If you're concerned about it, ask -- if they're not willing to discuss the clause with you, THEN I would move on.
posted by eenagy at 6:35 PM on February 25 [2 favorites]

I am the furthest thing from a lawyer, but arbitration clauses are extremely common in employment contracts, however I've never heard the part about splitting the costs of arbitration. Perhaps hearing fees are split, but not "the costs" of arbitration.

I would bring this up and ask them to include a clause about arbitration but has this particular note about splitting costs omitted from your contract. What exactly are the costs of arbitration anyway, and who determines them? This could be used to discourage you from making a complaint. In other words, they could intentionally make arbitration very expensive for you. Discovery, for example, could end up costing them a lot of money. Or they could intentionally drag out arbitration. Curious if anyone else wants to chime in on this.
posted by phaedon at 6:39 PM on February 25 [1 favorite]

IAAL, IANYL, TINLA. I have successful enforced several arbitration clauses in the US, including at the appellate level. (and I have such an appeal pending now)

As another commenter mentioned, arbitration clauses are quite common. You are probably party to several arbitration clauses already, such as in your cell phone contract. This goes for every commenter, too, by the way.

Arbitration is not "skeezy". In the US, we have a Federal Arbitration Act that favors arbitration. At least in the US, alternative dispute resolution is favored. And, you are wrong about it. At least in the US, there is discovery in arbitration, and an arbitrator's decision can be contested for just good cause if the arbitrator has ruled arbitrarily or capriciously. But yes, it is not a right of appeal necessarily. Also, having the costs split evenly is quite common and fair.

So yes, you are completely off about arbitration. You certainly aren't waiving "your desire to legally protect yourself".
posted by Tanizaki at 7:12 PM on February 25 [4 favorites]

I work in Ontario, with Employment Law (I am not a lawyer and have no legal training), and use Arbitration a fair amount. It isn't too expensive; I split the cost with the Employer and an all-day arb costs about $600/side, which would buy you a couple of hours with a lawyer in any other dispute with your Employer (which is basically a consult and one letter). The Employer pays for their lawyer, asking me to pay their legal fees would be a conflict of interest. In my case the arbitrator is mutually agreed on so we know the costs ahead of time. I have never had to pay for discovery, it is expected they will provide all relevant documents as requested (as will I).

I am not sure why you think Arbitrators don't follow the law, their decisions are often posted on CanLii and they are governed by the same law as everyone else. My experience has been they are very balanced (not favouring the Employer in other words), much more flexible, and faster than court. Also, keep in mind that in Ontario if something goes before a Judge you can be ordered to pay the other side's legal costs as well as your own if you lose. So getting out of the court stream saves you money.

Realistically, do you see any cause to need an arbitration in future? Arb is not above the law so if their was a case of a Health and Safety violation you would seek recourse under OSHA, if your Charter rights were violated you have the Tribunal, if your employer was breaking some obvious and fundamental law they would seek to settle before an arb (or even during it).

Maybe you would feel more comfortable asking for a mandatory mediation first? It is cheaper, less formal and lets you see the other side's argument and offeres an opportunity to solve the problem. The mediator usually pretty good at assessing whether the case has merit or if the offered settlement is the best offer you can expect.

I do all my arbs and mediation without a lawyer btw, just a lot of research.
posted by saucysault at 7:19 PM on February 25 [1 favorite]

Go hire an employment lawyer to review it and advise you of its implications. An arbitration clause isn't necessarily a bad thing, but not all arbitration clauses are created equally. Pay a lawyer for a couple hours to read it and give an opinion. If you're that concerned about it that you'd give up a job you want because of it, it's worth a little money to have a lawyer review it.
posted by whoaali at 8:25 PM on February 25 [2 favorites]

My current place of employment is near a few employment lawyers. I'll see who I can go grab for a couple hours and see what I can discover. Probably just peace of mind, but thanks for adding a little to that.
posted by Imperfect at 8:35 PM on February 25

> You are probably party to several arbitration clauses already, such as in your cell phone contract.

The problem with arbitration clauses in terms-of-service and EULAs is that they prevent class-action suits. That's not usually an issue with employment contracts.
posted by Phssthpok at 2:11 AM on February 26

Most lawyers familiar with arbitration believe that (1) the incidence of a ruling in favor of the claimant is higher and (2) the awards are typically lower - than is the case with litigating the matter in court.
posted by yclipse at 5:59 AM on February 26

The problem with arbitration clauses in terms-of-service and EULAs is that they prevent class-action suits. That's not usually an issue with employment contracts.

Ok, what is the "problem"? Both clauses are enforceable in the US (and I presume in Canada as well). In either event, OP is very likely party to a number of arbitration agreements.
posted by Tanizaki at 8:45 AM on February 26

Here in the U.S., about 10-15 years ago mandatory arbitration for employment disputes was all the rage among employers. However, over time it has become clear that arbitrators are very likely to award something in favor of the employee in almost every case (the "split the baby" phenomenon). By contrast, a large percentage of employment lawsuits are dismissed outright on what is called summary judgment (basically the judge dismisses the case because no reasonable jury could find in favor of the employee). Employers (and their lawyers) have come to realize that on balance they stand a better chance at prevailing in court.* Because of this, the tide has turned, and mandatory arbitration provisions are not as prevalent. Stated differently, mandatory arbitration may be a good thing for the average employee.

Whether this is also true in Ontario, I have no idea.

*the caveat to this has to do with large class action or high-exposure cases.
posted by pardonyou? at 12:32 PM on February 26