Take care to preserve contractual rights to arbitrating employment disputes

An article in the March issue of West Employment Law Letter provided helpful insights into the advantages and disadvantages of requiring employees to sign arbitration agreements following a banner year of jury verdicts in favor of employees (see “Avoiding runaway jury verdicts through arbitration” in our March newsletter).

Shortly after that article was published, the U.S. 9th Circuit Court of Appeals (whose rulings apply to employers in Arizona, Alaska, Hawaii, Nevada, Oregon, and Washington) affirmed a district court’s order compelling an employee to arbitrate, rather than litigate, her clams. The court’s opinion explained how an employer must act to avoid waiving its right to arbitrate disputes with employees who signed an arbitration agreement. You should take care to heed these steps because the burden on the party opposing arbitration is no longer a “heavy” one.

Background

Teresa Armstrong agreed to arbitrate any employment-related disputes she had against her employer Michaels Stores, Inc. But when a dispute arose, she filed a complaint in federal district court, rather than demanding arbitration.

In response to Armstrong’s complaint, Michaels filed an answer, asserting its right to arbitration as an affirmative defense. It also noted that it would ask the court to compel arbitration after discovery (pretrial exchange of evidence) was complete.