Supreme Court Evaluates Who Should Decide Validity of Arbitration Agreements

Many times as a condition of employment a new hire will sign an employment agreement containing a mandatory arbitration agreement. Often, these arbitration agreements provide that an arbitrator has the exclusive authority to resolve certain employment disagreements.

Although arbitration may have many advantages, such as being quicker and less expensive than traditional litigation, the mandatory arbitration clauses often found in employment agreements or employee handbooks can be unfair and contain unfavorable provisions.

In Rent-A-Center West Inc. v. Jackson, U.S., No. 09-587, oral argument 4/26/10), an African American account manager – Antonio Jackson – challenged who should determine if the mandatory arbitration clause he signed as a condition of employment was unconscionable and unenforceable – an arbitrator or the federal court.

The arbitration issue arose out of Jackson’s race discrimination case against Rent-a-Center, for the alleged failure of Rent-A-Center to promote him and its promoting of non-African American employees with less seniority. After complaining to his superiors, the Jackson was transferred and eventually fired.

The company then filed a motion to compel arbitration in order to resolve Jackson’s discrimination claims. Jackson objected, asserting that the arbitration agreement was “unconscionable and unenforceable” in part because it limited discovery and that he was told it was non-negotiable when he was hired by Rent-A-Center.

A decision is expected in June, however much of the questioning focused on whether the issues raised in this case deal with the formation – or “making of the agreement” – in which case the Court must decide if the agreement is valid or “post-formation” issues which the arbitrator would decide.

Mandatory arbitration agreements are common in many employment agreements and policies. Before signing one, it’s a good idea to have an attorney review the agreement. The agreements are often written for the benefit of the employer and may contain language limiting your rights. Although federal law protects against employer-friendly arbitration clauses, it’s best to obtain a good agreement at the start.

If you have any questions about mandatory arbitration clauses or employment agreements, contact Buckley Bala Wilson Mew LLP, a Georgia law firm committed to protecting employees rights.