Private Resolution of Public Disputes: Employment, Arbitration, and the Statutory Cause of Action

Abstract

In this Article, I argue that arbitration agreements fall somewhere along the middle of the rights/contract continuum. My understanding of the nature of arbitration agreements relies on a previously existing area of employment law. There is a particular aspect of the employment relationship that, while open to contract, remains subject to constraints imposed by the law. A noncompete agreement permits an employee to contract with his employer to not work for a competitor following the termination of the employment relationship. This right to contract away the right to compete is, however, narrowly construed by the court system. A court may not enforce a noncompete agreement unless the agreement meets a standard of reasonableness. I propose that this same analysis be applied to arbitration agreements. It is my position that a predispute, mandatory arbitration agreement should not be enforced unless it meets certain requirements that together make the agreement reasonable. This standard of reasonableness will protect the interests of all parties: the employer, the employee, and society as a whole. In Part II of this Article, I discuss the problems created by the use of mandatory arbitration clauses in employment agreements. Part III examines the fallacy behind applying general contract principles to arbitration agreements in the employment context. In Part IV, I outline a proposal to constrain the use of mandatory arbitration as a means of resolving employment disputes. My proposed legislative solution is designed to address the concerns raised by the continued use of mandatory arbitration clauses in employment agreements.