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Employee Disputes: Avoiding Court

Are you within your rights to require employees to sign a binding arbitration agreement?

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This story appears in the October 2003 issue of Entrepreneur. Subscribe »

Getting sued by your own employees is a drain on your business's resources. That's why many companies require employees to sign an agreement waiving their right to sue over employment disputes. Instead, any dispute must go before a panel of arbitrators, who listen to both sides and decide how to resolve the problem. It's cheaper and faster than a lawsuit.

From the employee's point of view, though, arbitration can feel like second-rate justice. Often, the arbitration agreement requires whoever loses to pay for the cost of the arbitration, which can run tens of thousands of dollars. The employee has less access to company records than in litigation, making it harder to dig up evidence. And a panel of arbitrators familiar with employee relations may be harder to sway than a jury.

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