When you signed your employment contract, you probably did not realize that it included a mandatory arbitration clause. This clause requires employees to resolve disputes in private arbitration instead of in a court of law. However, the times are changing – and so is the law.
More about mandatory arbitration in Indiana
Employers claim that employment arbitration offers a better method of dispute resolution than litigation because it is private and usually less expensive. In arbitration, a neutral arbitrator hears both sides of a dispute and issues a final, binding decision. However, it can have many downsides for the worker. For example:
- You do not have a say in how to resolve the dispute
- A jury trial may have been more favorable to you
- The private proceedings may lack transparency
- The arbitrator may tend to favor employers over employees
- You do not have the right to file an appeal
Indiana courts usually uphold mandatory arbitration clauses as long as the clause has very specific language identifying the issues subject to arbitration. If the contract overreaches, the court will probably not uphold it. Due to the Ending Forced Arbitration of Sexual Assault And Sexual Harassment Act (EFASASHA), courts also cannot enforce arbitration clauses in which the plaintiffs alleges sexual assault or sexual harassment.
A change on the horizon
Fortunately, public opinion about mandatory arbitration is changing rapidly. Following the #MeToo movement, many employees spoke about the unfair nature of mandatory arbitration clauses, especially as they pertain to sexual harassment in the workplace. Congress passed the EFASASHA in 2021. It is a major blow to the existing law that provides for mandatory arbitration clauses, the Federal Arbitration Act of 1925. The EFASASHA combined with the public outcry against mandatory arbitration is a major step in the right direction of ending forced arbitration clauses in employment contracts. For now, though, employees bound by forced arbitration will have to keep fighting.