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Arbitration Can Be Better Than Litigation

September 2014

Published in the Daily Journal of Commerce

For many Oregon employers, arbitration is preferred over litigation to resolve employment disputes. Arbitration can streamline dispute procedures and often proceeds more quickly than in court; it also can save the parties attorneys' fees.

Arbitrators may also be more likely than jurors to apply the facts to the law without emotion or bias. Arbitration can keep a dispute private and prevent it being tried in the press. Depending on the facts (or allegations) of the dispute, this may be the key advantage to arbitration for an employer. Also, arbitration may more efficiently limit so-called "scorched earth" discovery in a manner that employers appreciate since they tend to have most of the employment-related records.

Lastly, arbitration decisions are usually final (aka "binding"), and can be appealed in very limited circumstances. Under binding arbitration, an employee unhappy with an arbitrator's decision will not get a second bite at the apple before the appellate court; however, neither will an unsatisfied employer.

Oregon state and federal courts typically enforce employment arbitration agreements. Case in point: In August 2014, the United States District Court for the District of Oregon enforced an employer/employee arbitration agreement in Anderson v. Xerox Corp.

In the case, the employee filed a discrimination complaint against his employer, Xerox Corp. Thereafter, Xerox filed a motion to compel arbitration and dismiss the complaint. Xerox argued that when the employee had applied for employment in 2007, he had "electronically" initialed acceptance of Xerox's Dispute Resolution Plan (DRP), and that Xerox had provided the employee with an amended version of the DRP that states: "Employment, consideration for employment, or continued employment, and other valuable consideration after the applicable Effective Date of the DRP constitute consideration and consent to be bound by the DRP, including its mandatory arbitration provisions, by the Applicant and/or Employee, on the one hand, and the Company, on the other hand, during and after the employment relationship."

The employee argued he never agreed to arbitrate anything. The District Court disagreed with the employee, reasoning that because the employee did not dispute that he received the employer's written materials that explained the DRP and its related arbitration provisions, and because the employee continued to work for the defendant, the employee "was aware of and accepted defendant's employment term that all disputes concerning his employment must be resolved via arbitration."

The court not only enforced the arbitration agreement, but also dismissed the employee's complaint. This was obviously a very good result for the employer.

Oregon employers who want to take advantage of the benefits of arbitration should keep the following information in mind: 1, ORS 36.620 provides that an employment arbitration agreement is not enforceable unless it is provided to the employee at least 72 hours before the first day of employment (or upon a bona fide advancement) and the employee signs an acknowledgement containing the language set out in the statute; 2, Draft the arbitration agreement so that it will be clear to any court that reviews it that employees knowingly waived their right to a jury trial; 3, Expressly state that employees have the right at arbitration to be represented by counsel; 4, Include a process for permitting reasonable discovery, such as the exchange of documents and depositions, at arbitration; 5, Give employees the chance to equally participate in selection of an arbitrator; 6, Agree that the employer will pay arbitration costs that would be greater than the employee would have to pay in court, such as arbitrator fees; 7, Agree that employees who agree to arbitrate their disputes will have the same potential remedies that would be available in court under the applicable law; and 8, Make sure the agreement to arbitrate is not lopsided in favor of the employer.

The extra care needed to ensure that an arbitration agreement is enforceable is well worth the effort.


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