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Oil companies face increased litigation over terminations

Everybody has noticed significant decreases at the gas pump in recent months due to the decreasing price of oil. As oil prices have been significantly dropping over the last couple years, layoffs in the oil industry have picked up, particularly over the last year or so. Along with the employment cuts has come an increase in employment litigation.

Employment lawyers across the country have noted an increase in cases involving back wages, employee misclassification, unpaid overtime and age discrimination. In addition to these cases, there are also the cases resolved through arbitration or mediation proceedings, which occur outside the courtroom. 

For employers, managing liabilities relating to employment issues is a challenging task. The fact of the matter is that termination always brings some risk of litigation. That being said, a lot can be done to help manage liabilities in this area. We have previously written on this blog about the importance of companies taking steps to minimize potential liability for termination disputes. One of the ways companies in the energy industry—and other industries, of course—do this is by negotiating arbitration agreements with employees and contractors.

Arbitration agreements do not necessarily always protect an employer from litigation, though. They must be drafted correctly. When an arbitration agreement is poorly drafted, particularly with respect to the grounds upon which arbitration is required under the agreement, litigation can result.

Properly drafting an arbitration agreement is not only a matter of following the proper formalities and rules applying to such agreements, but drafting the agreement in a way that makes it an effective tool for resolving disputes. In our next post, we’ll say a bit more about this, and the importance of working with an experienced attorney to craft effective arbitration agreements.  

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