Check fine print before signing job contract

WORKING LIFE

March 05, 1995|By DEBORAH JACOBS | DEBORAH JACOBS,Chronicle Features

It's your first day at a new job, and you can't wait to finish all the initial paperwork. But slow down. Read the fine print before you sign anything. Nowadays the package might well include this spoiler: a requirement that you use arbitration to resolve disputes with the company. And they want that promise long before any trouble arises. The net effect is that you lose your right to a jury trial and other potential benefits of litigation.

Companies like such provisions, known as predispute arbitration clauses, for a variety of reasons. Lawsuits -- whether for sexual harassment, wrongful termination, sex, race or age discrimination -- take years to thrash out in court. Arbitration has at least the potential of resolving things in a matter of days or weeks. It also keeps cases away from juries, which are often made up of working people who see things from the employee's perspective.

In most arbitrations, you bring your case before an arbitrator or a panel of three. Usually their decision is binding and you cannot appeal. The worst part is that arbitrators do not have to know anything about employment matters, follow the law or explain the reason for their decision.

Plus, somebody has to pay them. Sometimes the first day is free, but after that the cost jumps to between $400 and $700 a day -- for as long as it takes. Your employer may or may not share this expense. (Again, depending on the fine print you've signed.)

You also lose your right to do extensive "discovery" -- the period before a trial during which opponents request documents and take sworn testimony to support their cases. These statements, called depositions, are "the most important weapons" people have in employment cases, says Cliff Palefsky, a San Francisco lawyer.

The main problem with predispute arbitration clauses, though, is that they force you to decide ahead of time how to resolve conflicts. They may pop up as early as on the job application, or later when the company awards you a bonus, stock options or that hard-earned promotion.

If you subsequently have a legal claim, you can't go to court, or rely on other dispute resolution methods -- like mediation. In mediation, you and the company negotiate a mutually acceptable settlement rather than having one imposed on you by an arbitrator. Unlike arbitration, mediation usually leaves open the possibility to sue when you can't work things out.

What can you do if your company asks you to sign a predispute arbitration clause? Personally, I wouldn't want to lose out on a job offer or worse yet, get fired for refusing to sign. Ideally, ask a lawyer. (A one-hour meeting runs about $150 to $300.)

Some lawyers may suggest that you quietly cross out or qualify the clause, write your initials in the margin, and hope that the company won't notice. Alternatively, the lawyer may help you negotiate with the company to eliminate the objectionable terms like restrictions on remedies or your right to have a lawyer represent you in arbitration.

Deborah Jacobs, a business writer specializing in legal topics, regularly contributes to the New York Times, Wall Street Journal, Forbes and Newsweek. Write to her c/o Chronicle Features, 870 Market St., Suite 1011, San Francisco, Calif. 94102. Please include your name, address and telephone number.

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