Arbitration Provisions in Employment Agreements

Including arbitration provisions in employment agreements can help to reduce the risk of expensive and time consuming litigation by requiring a dispute to be resolved by a neutral arbitrator, rather than through the court system. Generally speaking, agreements to arbitrate employees’ statutory claims are enforceable, provided that they do not include any provisions waiving any statutory rights or remedies, and they set forth fair arbitration procedures. An arbitration provision should be set forth clearly and prominently within an employment agreement; simply including one in an employee handbook, without more, will likely render an arbitration provision legally unenforceable.

Michigan’s Uniform Arbitration Act (“UAA”) governs the scope and applicability of agreements to arbitrate in this state. Notably, the UAA recently underwent substantial revisions which took effect on July 1, 2013. Among many other things, the revised UAA provides arbitrators with enhanced discretion over the discovery process, which may afford the parties greater opportunity to obtain relevant documents and information. Of particular interest to employers, the revised UAA gives arbitrators the power to issue orders for provisional remedies – including, for instance, preliminary injunctions to stop former employees from continuing to violate non-compete agreements – to the same extent that a court could issue such orders.

Please contact Wright Beamer with any questions regarding agreements to arbitrate.