January 2015
By: James B. Sherman, Esq.
The
ability to resolve employment disputes quickly and without the legal expenses
normally associated with court litigation, are just some of the reasons
employers consider adopting arbitration agreements for their employees. The Minnesota Court of Appeals recently added
another reason for employers to use arbitration agreements. The court upheld an employment agreement that
contained an arbitration clause that required employees to pursue arbitration
of any controversy or claim related to their employment, within just 90 days of the events giving rise to
the claim. The employee in this case failed
to act within the 90-day period but argued the agreement was unenforceable
because the employment claims at issue had a much longer, six-year statute of
limitations period to sue in court. The
court disregarded this argument and enforced the much shorter 90-day limitation
period provided for in the parties’ agreement.
Not
every arbitration agreement can get away with shortening limitations periods
provided by statute. Whether and to what
extent an arbitration agreement can shorten a limitations period will depend on
what is “reasonable” in each case. Many
workplace laws allow employees to bring claims one full year or more after the
events giving rise to the claim (such as a termination) leaving employers in
limbo, waiting to see whether employees will bring legal claims. An agreement that drastically shortens this
length of uncertainty can be very beneficial to employers, but such an
agreement must be carefully worded. In
this case, the court determined that the 90 days provided for in the agreement
was not unreasonable, as there was no evidence that the employee would have had
trouble pursuing arbitration within the 90 days had he wished to do so.
Arbitration
has its drawbacks and does not necessarily make sense for every company or in
every situation. For instance arbitrators sometimes issue unexpected decisions
and unlike trial court decisions, it is much harder to challenge an
arbitrator’s ruling on appeal.
Nevertheless, arbitration is becoming increasingly common, especially in
the employment setting, as a means of resolving workplace disputes efficiently
and expeditiously. This latest decision also
approved of the use of arbitration to ensure that workplace disputes are
brought promptly, which can benefit all parties concerned.
For a
short, easy to read list of pros and cons of arbitration in the context of
employment disputes, or for assistance in drafting an arbitration agreement,
contact Ms. Julie Anna Summer at (952) 746-1700, or email jusummer@wesselssherman.com.
