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employment arbitration agreement

An employment arbitration agreement is a contract between an employer and an employee, sometimes signed prior to employment and in some instances after employment has begun, in which both parties agree to submit any employment-related disputes to arbitration, rather than to the traditional court process.

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Such agreements benefit both employers and employees because they tend to produce more rapid resolution of claims. They are especially advantageous for employers because arbitration avoids the occasional high-dollar, "runaway jury" verdict. On the other hand, arbitrators have a tendency to "split the baby" so that even when an employee's claim is of questionable merit, an employee will often receive an award. Although there is conflicting case law in various jurisdictions regarding the enforceability of preemployment arbitration agreements, the weight of authority appears to hold that such agreements—if equitably drafted—are in fact, enforceable.