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What do fair employment contract arbitration clauses look like?

In recent decades, more and more Michigan executive employment contracts have begun including an arbitration clause. This means that the two parties -- employers and employees -- agree to settle any contract disputes or violations outside of a courtroom. When you sign an employment contract containing an arbitration clause, you could severely limit your legal options if a dispute arises.

Still, because litigation is costly and inconvenient for both parties, arbitration clauses are not always a bad provision. The key is to make certain your employment contract's arbitration clause is as fair as possible to all parties.

How do you know if such a clause is fair? You can and should have an attorney review the document before you sign it. You can also look over the contract yourself to get a head start on your attorney consultation. Fair employment contract arbitration clauses often have the following:

  • Equal input or control when choosing an arbitrator
  • No language that limits either party from pursuing a legal remedy if arbitration fails
  • Provisions stating that the employer will cover the cost of arbitration
  • No language preventing you from having legal counsel present during arbitration proceedings

Clear provisions stating that the arbitrator must disclose any details indicating that they may have an interest in the contract dispute. For example. if a fellow employee acts as the arbitrator, they may have an interest in the employer's side.

Employment contracts function best when they provide fair and equal protections for all involved parties. Many new executives may not know how to spot any unfair provisions or clauses. This is why it is so important to seek legal guidance.

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