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October 03, 2000
Employee Arbitration Clause Case Hits Supreme Court

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CHICAGO--As the United States Supreme Court begins its new term on Oct. 2, it is scheduled to hear arguments in a case that will have significant impact on the hotly disputed use of mandatory arbitration clauses in employment contracts, according to Michael D. Karpeles, partner at the Chicago law firm of Goldberg, Kohn, Bell, Black, Rosenbloom & Moritz Ltd.

In Circuit City Stores Inc. v. Adams, U.S., No. 99-1379, the High Court will decide whether the Federal Arbitration Act, which requires the enforcement of arbitration agreements, is applicable to employment contracts. At issue is whether employees may be required to give up their right to sue in court as a term or condition of employment.

In Adams, plaintiff Saint Clair Adams filed a discrimination claim against Circuit City under California's Fair Employment and Housing Act. Prior to that, Adams had signed an arbitration agreement as a condition of employment.

"Employees may argue that these agreements are forced upon them and take away their constitutional right to a jury trial," noted Karpeles, "but as long as the agreements provide sufficient procedural protections, arbitration can be less time consuming and expensive than court litigation for both sides."

Karpeles believes many employers would prefer that arbitration be the exclusive form of dispute resolution in employment-related claims. He cautions, however: "The flip side is that federal judges may be more willing to dismiss a case outright against an employer rather than splitting the baby as many arbitrators may be tempted to do."

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