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Supreme Court Sides with Businesses on Arbitration Issue

AllIn.jpgResolving disputes between employers and employees can be a complicated and acrimonious process. Unfortunately, it can be costly in terms of time, resources, and money to settle these matters, so it is not surprising that employers often favor options that make the process easier and less expensive.

One option employers across Minnesota may explore is including arbitration clauses within employment contracts, though these clauses are often at the center of employment disputes. In fact, one such recent dispute went all the way up to the U.S. Supreme Court.

Reconciling federal laws on banding together, arbitration

As noted in articles like this one from Statesman Journal, a primary issue in these matters is the conflict between two federal laws. One gives workers the right to join together in court, the other encourages arbitration as a preferred method of dispute resolution.

Whether employers could use an arbitration clause to prevent workers from banning together in class action lawsuits put a spotlight on this conflict.

Siding with businesses

In a 5-4 decision, the Supreme Court ruled that arbitration clauses are valid. In other words, employers are within their rights to prohibit non-union workers from class actions.

It is not yet known if lawmakers will attempt to change the law that led to this decision.

What this means for Minnesota employers

Determining whether to utilize arbitration clauses is not a decision that employers should make lightly. Such clauses can lead to conflict, litigation, and the shrinkage of talent in their pool of potential employees. 

However, arbitration clauses can be effective at minimizing legal expenses and expediting the process should an issue arise between an employee and an employer, so it may be something business owners might consider. Under these circumstances, it is crucial to consult an attorney who can provide guidance and help employers create valid, enforceable agreements.

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