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Why You Should Always Read (and Understand) an Employment Agreement Before Signing

Why You Should Always Read (and Understand) an Employment Agreement Before Signing

Most of us have, at one time or another, signed a legal agreement without reading the entire document or fully understanding its terms. Unfortunately, such ignorance is not a defense when the other party decides it wants to enforce the agreement. This is a common problem in employment law, where employers often demand employees sign arbitration agreements.

Arbitration agreements waive an employee's right to sue over employment-related issues such as illegal discrimination or wage and hour violations. Instead, the employee must submit any such disputes to binding arbitration. While arbitration can offer a less costly and speedier method of handling employment disputes, arbitration can also limit an employee's due process rights and unduly favor the employer.

Chinese-Speaking Workers Bound by English-Language Arbitration Agreement

Unfortunately, once you sign an arbitration agreement, it is extremely difficult to get out of it. Federal law strongly favors arbitration, even when it affects employment rights under state or local laws. In fact, the federal presumption in favor of arbitration is so strong the courts will enforce agreements even in cases where the employee literally could not read or understand its terms.

This recently happened in an overtime and employment discrimination case in Manhattan. The plaintiffs worked in the kitchen of the defendant, a local Chinese restaurant. In their lawsuit, the plaintiffs, who are Chinese, allege that the defendant failed to pay them required overtime and treated them differently than Caucasian workers.

In response to the lawsuit, the defense pointed to binding arbitration agreements signed by all three plaintiffs. The agreements were written in English. Yet none of the plaintiffs read or understand English. Their native languages are Cantonese and Mandarin Chinese. They maintained it would be “unconscionable” to enforce the English-only arbitration agreement against them under New York law.

A federal judge disagreed. In a November 28 order staying the case pending arbitration, the judge said that by signing the arbitration agreements in the first place, the plaintiffs created the legal presumption the contracts were valid and enforceable. Courts have long held that the “[f]ailure to read or understand a contract does not relieve a signer of its obligations thereunder.” The “inability to speak English or to understand the terms of a contract is an insufficient cause for unconscionability.”

Not only did the judge find the arbitration agreement valid, he also said that under its terms, certain questions related to the scope of arbitration must first be decided by the arbitrator and not the court. This includes whether the plaintiffs can pursue their claims on a collective or individual basis, as well as the enforceability of a “confidentiality clause” in the arbitration agreement itself.

Get Advice From a New York Employment Lawyer

Before your employer asks you to sign any agreement that may affect your legal rights, you should consult with a qualified New York employment attorney. Never feel that you have no choice but to sign on the dotted line. Call the Law Offices of Mahir S. Nisar at 800.496.3076 to schedule a consultation with our office today.

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