In our last post, we mentioned the increasing number of layoffs in the oil and gas industry, which has coincided with steady decreases in the price of oil. Along with that increase, there has been an increase in employment law disputes, though the increase has been tempered by the fact that employers and employees, in many cases, resolve their disputes through arbitration. In many cases, arbitration is compulsory under employment contracts.
Compulsory arbitration is often seen by employment lawyers as unfair to employees since the process is said to typically play out in favor of employers. Arbitration, though, is supposed to be a neutral process of resolving disputes outside the adversarial system. Many of the same elements are used or can be used in arbitration, such as depositions, witnesses and presentation of evidence, and juries, and appeals of certain matters. When done properly, arbitration can be an effective means of fairly resolving disputes.
Arbitration agreements are governed by both federal and state law. Under federal law, The Federal Arbitration Act allows employers to secure compulsory and binding arbitration agreements from employees. Louisiana has its own law covering arbitration agreements, though federal law takes precedence. Under Louisiana’s Binding Arbitration Law, arbitration agreements are considered valid as long as they meet the ordinary legal requirements for a valid contract and there are no equitable reasons to declare the agreement unenforceable.
Because employment contracts are covered by the Federal Arbitration Act, it is important for employers to be aware of the requirements under federal law. In our next post, we’ll make brief mention of some of these requirements and how an experienced attorney can help employer avoid pitfalls in using such agreements.
Louisiana Binding Arbitration Law, LRS Ch. 2, S. 4201
Federal Arbitration Act