Since last year’s landmark Supreme Court decision in AT&T Mobility v. Concepcion, companies have been looking more seriously at incorporating arbitration agreements in the employment context. During the first breakout session of Day 2 of InsideCounsel’s 12th annual SuperConference, a panel of in-house and outside counsel got together to discuss best practices in using arbitration agreements.
In “Arbitration Agreements Post Concepcion: What You Need to Know,” the panelists—including Ronald DeMoss, EVP and GC of Rent-A-Center Inc.; William Bedman, senior director of HR legal at Halliburton; and Marcia Goodman, partner at Mayer Brown (moderated by Mayer Brown Partner Charles E. Harris II)—gave a broad overview of Concepcion and its impact, starting with the origins of arbitration all the way through to practical considerations when implementing arbitration agreements. And all the panelists agreed: Arbitration is an effective alternative to costly litigation.
“It’s faster, it’s cheaper, it’s less adversarial, and it’s final—good or bad,” DeMoss said. DeMoss noted that several of his in-house peers have questioned the practice of arbitration, declaring it’s “not for them.” To that, he said, “It’s important to take a look at arbitration to see if it’s right for you and understand the benefits. There are two very significant reasons to consider arbitration: the cost of litigation and avoiding the jury wild card.”
The panel said that although arbitration had been around since at least the time of ancient Rome and the Federal Arbitration Act was passed in 1925, arbitration provisions in employee agreements didn’t become popular in companies until the early 1990s. Since then, some courts have upheld these provisions while others struck them down.
After several other decisions began to shape the use of these agreements, businesses eventually began to revise their provisions to bar classwide arbitration as mandated by some of the decisions.
In Concepcion, the Concepcions sued AT&T over tax they were charged on free cell phones. When AT&T moved to arbitrate, as the consumer contract mandated, a trial court denied the motion and the 9th Circuit affirmed. The Supreme Court, however, said the arbitration clause was enforceable.
“Since Concepcion, there has been a pull and tug on how the case will be applied by the courts in the employment context,” Goodman said. “Employers should look at Concepcion and the decisions since Concepcion, and work with counsel to tweak their programs to address arguments being set forth.”
The panel went on to offer some practical considerations with regard to implementing arbitration provisions in employee agreements—advising companies that one size does not fit all. They also advised in-house counsel to acquire signatures or initials of employees, avoid legalese in agreements, and state the venue for the arbitration.