United States: Arbitration Agreements Upheld In Kentucky

With the rise in employment discrimination lawsuits, companies are requiring that employees agree to mandatory arbitration for asserting claims of discrimination rather than filing suit in court. The debate over whether mandatory arbitration is lawful has raged for the past several years with employers winning the battle. In the landmark case, Gilmer v. Interstate/Johnson Lane Corp. (1991), the United States Supreme Court upheld mandatory arbitration as a condition of employment if it meets certain criteria.

Mandatory arbitration is a great alternative for employers because it avoids prolonged and expensive litigation as well as negative publicity.

In order for mandatory arbitration to be enforceable it must meet some of the following criteria: (1) It must provide the same remedies that an employee would have in a court of law; (2) the arbitration agreement must be entered into knowingly and voluntarily; (3) the employee must be entitled to representation; (4) the employee cannot be required to pay the costs associated with arbitration; (5) the employee must be able to choose a neutral arbitrator; and (6) discovery must be allowed.

It should be noted that both Ohio and Kentucky have laws banning mandatory arbitration agreements as a condition of employment but neither law has yet to be challenged. Therefore, it is unclear the impact they will have.