The United States Arbitration Act (commonly referred to as the Federal Arbitration Act, or FAA) was enacted in 1925 and provided the ability for courts to oversee private disputes. This includes binding arbitration, where the parties are legally forced to settle through arbitration.
When Does the FAA Apply?
The text of the Federal Arbitration Act specifies that an arbitration agreement is applicable if the agreement is in writing, pertains to a commercial transaction (which includes employment), and states that the parties involved agree to arbitrate in the case of a dispute. These requirements are fairly broad, and favor employers by making arbitration agreements, such as those included in employment agreements, enforceable regardless of context. If the arbitration agreement falls under the FAA, Michigan state courts are compelled to use federal guidelines in deciding whether or not the arbitration agreement is upheld.
What Does the FAA Mean for me?
Unfortunately, the act clearly favors arbitration, meaning that you will more than likely be forced to arbitrate instead of taking your case through the courts. Just this month, the U.S. House of Representatives passed a bill to exclude sexual assault or harassment claims from mandatory arbitration, which is a win for victims and plaintiffs, and which will hopefully become law in the near future. In Michigan, the statute of limitations applies to arbitration agreements, and state law will also uphold a statute of limitations contained within the agreement itself, if it has one (for now – this may change in the future, if the Michigan Supreme Court changes the law). Be sure to read your arbitration agreement and check for this, as it will limit the amount of time you have to act. Depending on the text of the arbitration agreement, you may also argue that the agreement excludes your case or that its scope does not cover the context of your case. This would allow you to take the matter to court instead of being forced to arbitrate, so speak with your attorney to see if this is possible.
Usually, the arbitration will come in the form of a digital contract, but they are sometimes served in person. Arbitration is less like a civil trial and closer to a private business deal, where you are negotiating for an award that you feel is appropriate for your situation. Normally, one party will submit the demand for arbitration to the American Arbitration Association, who will then begin the process of selecting an arbitrator to conduct the hearing. Sometimes, you and your employer can agree on an arbitrator. There, both you and the other party will submit evidence, which will be weighed into the decision of the award. If you feel like the outcome of the arbitration is unfair, you may be able to challenge the award by petitioning the court, but the bases for challenge are limited and this process can be difficult.
If you’re being strongarmed into arbitration, schedule a free consultation with Carla D. Aikens, P.L.C. today. We’re ready to protect your rights and do whatever is necessary to attain justice.
Carla D. Aikens, P.L.C.
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