An arbitration clause in an employment agreement means that any employment dispute must be handled through arbitration rather the courts. Case law has upheld such clauses as valid and binding. Most arbitrations are handled by one arbitrator, though there can be a panel of arbitrators, depending on the language in the arbitration clause. The source of the arbitrators, such as American Arbitration Association, is usually spelled out in the arbitration clause. Under AAA rules, both parties have to pay an initial fee for a list of arbitrators to be provided to the parties.
Arbitration is generally less formal and costly than the court process. However, an arbitrator’s decision is binding, with very rare exceptions. Parties are usually represented by attorneys in arbitration, but can choose to represent themselves.
Gabrielle L. Strich, Esq.
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