Pennsylvania Employment Arbitration Agreement: What You Need to Know

An employment arbitration agreement is a contract that stipulates the terms and conditions of settling disputes arising between employers and employees through arbitration instead of the court system. In Pennsylvania, this type of agreement has become increasingly popular among employers, but it`s essential to understand what it means for employees.

If you`re an employee or considering a job offer in Pennsylvania, here`s what you need to know about the state`s employment arbitration agreements.

What is an Employment Arbitration Agreement?

An employment arbitration agreement is a contract that both employers and employees sign, stating that any disputes that arise between them will be resolved through arbitration instead of the traditional court system. By signing this agreement, employees are waiving their right to sue their employers in court.

Pennsylvania law requires the arbitration agreement to be “knowing and voluntary” for it to be valid. Employers must ensure that employees understand the agreement they are signing and that it`s not a condition for their employment.

Pros and Cons of Employment Arbitration Agreement

Pros:

1. Confidentiality: Arbitration proceedings are confidential, which means that the details of the dispute remain private. This confidentiality can be beneficial for both employers and employees.

2. Quicker Resolutions: Arbitration typically takes less time than a court case, which means that disputes can be resolved quicker.

3. Cost-Effective: Arbitration is usually less expensive than going to court, making it a cost-effective option for both employers and employees.

Cons:

1. Limited Appeals: Unlike court cases, the appellate process for arbitration is limited, making it more challenging to appeal an unfavorable decision.

2. No Jury: During an arbitration, there is no jury present, which means that an arbitrator will make the final decision.

3. Waiver of Rights: By signing an arbitration agreement, employees are waiving their rights to sue their employers in court, making it difficult to seek legal recourse if the outcome of the arbitration is unfavorable.

Enforcement of Employment Arbitration Agreements

In January 2019, the Pennsylvania Supreme Court issued a landmark ruling that significantly impacted the enforcement of employment arbitration agreements in the state. In the case of Chevalier v. Gen. Nutrition Ctr., the court held that a provision in an employment arbitration agreement that waived an employee`s ability to bring class actions under the state`s Wage Payment and Collection Law (WPCL) was unenforceable.

As a result, Pennsylvania employers can no longer require employees to waive their right to pursue class-action lawsuits under the WPCL, even if they agreed to do so in an arbitration agreement.

Conclusion

If you`re an employee considering a job offer in Pennsylvania or if you`re currently working for an employer that requires you to sign an employment arbitration agreement, it`s crucial to understand your rights and obligations under the agreement. While there are some advantages to arbitration, it`s essential to be aware of the potential drawbacks and weigh them carefully before agreeing to sign an employment arbitration agreement.