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Why employers like arbitration agreements

Morgan Stanley adopted a dispute resolution program that it required employees to affirmatively opt-out of or become covered by the process. In addition, to this program being imposed on its employees, it contains troubling elements that negatively affect their workplace rights.

The dispute resolution program ends their ability to go to court and sue their employer and this prohibition extends to civil rights violations. You may wonder why this is significant. 

After all, they can still arbitrate, and arbitrations are similar to courtroom litigation, right? One of the significant differences between your right to sue under the U.S. and New York constitutions is that an arbitration agreement is a contractual agreement.

And an agreement drafted by attorneys hired by Morgan Stanley is not the same as a set of court rules drafted by courts and the legislature. And this is important.

For one, it means Morgan Stanley controls every aspect of the agreement. They are likely to have written it in such a way as to place individual employees at as much of a disadvantage as possible.

While the arbitration agreement is a contract, it is not a negotiated one. The terms are written and imposed by one party. Many employees at Morgan Stanley may not have read the entire 22 pages of the "CARE Guidebook," and many may not realize they had agreed to arbitrate matters, let alone understand the terms of that arbitration agreement.

Another advantage for the employer is they it prohibits class actions by the employees. A class action permits many employees to band together with a common grievance. This allows the class to obtain experienced employment counsel to litigate their issue and protect their rights.

Under the arbitration agreement, you would have to hire your own individual attorney, which depending on how much is financially at stake, may not be viable. Which means the employer often wins by default, as the employee cannot afford to arbitrate, so they are left with the Hobson's choice of suffering the harm or walking out the door.

Source: bloomburg.com, "It's Deadline Time at Morgan Stanley to Keep Your Right to Sue," Laura Colby and Michael J Moore, October 2, 2015

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