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Why employers like arbitration agreements

 

A news story reports that Morgan Stanley required employees to opt out or become covered by a dispute resolution program that ends their ability to go to court and sue with regard to civil rights violations. you may wonder why this change is of any significance.

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.

 

This means the terms of this agreement are drafted by attorneys hired by Morgan Stanley, and not by the founding fathers during the Constitutional Convention. And this is important.

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

Filings in federal court are governed by the Federal Rules of Civil Procedure, which strive to be fair to all litigants. Since many employees at Morgan Stanley may not have even read the entire 22 pages of the "CARE Guidebook," many may not realize they had agreed to arbitrate matters, let alone the terms of that arbitration agreement.

Another advantage for the employer is they can prevent class actions by contract. 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.

With an arbitration agreement, you would have to hire your own 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 violation or waking 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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