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Is an Arbitration Agreement Binding if I do Not Sign it?

Is an Arbitration Agreement Binding if I do Not Sign it?

There are many situations in which a claim for employment discrimination or overtime and wage hour violations are subject to a binding arbitration agreement. Many employees are asked to sign such agreements as a condition of employment. Even employees who do not directly sign an arbitration agreement may still be bound by one if a court finds they “directly benefited” from the deal.

Judge Refers Discrimination, FLSA Claims Against NFL to Arbitrator

Consider this recent decision by a federal judge here in Manhattan. This case, Buckley v. National Football League, involves several individuals who provided security services to the NFL. Three of the plaintiffs signed the agreement as owners or managers of their own business entity, which in turn provided services to the NFL as an “independent contractor,” as opposed to being employees of the league.

Nevertheless, the plaintiffs' lawsuit centers on their claims that they were really employees of the NFL, and in that capacity were victims of age discrimination and violations of the Fair Labor Standards Act (FLSA). The NFL, in turn, moved to stay the lawsuit and move the entire case into binding arbitration, which is required by the terms of each plaintiff's consulting agreement.

The judge sided with the NFL. First, the court noted that while the three plaintiffs mentioned above “did not sign the Agreements in their personal capacity,” they did so as agents of separate business entities. While the individual plaintiffs were not parties to these agreements, they still received “direct benefits” from the contracts, namely their compensation for providing services to the NFL. For this reason, it was appropriate to bind the individual plaintiffs to the terms of the arbitration agreement.

Next, the judge explained that the plaintiffs' employment discrimination and FLSA claims clearly fell within the “scope of the arbitration agreement,” which was broadly written to cover “any dispute” arising under the contract. This includes claims challenging the validity of the contract itself. Here, the plaintiffs allege the entire contract was the product of the NFL misrepresenting the nature of the deal–i.e., that the plaintiffs were independent contractors rather than employees.

Finally, the court said the arbitration agreement was not unenforceable as a matter of law. The plaintiffs argued that arbitration would illegally prevent them from pursuing certain statutory rights under federal law. The judge did not read the agreement that way. Nor did the judge find that requiring arbitration would deprive the plaintiffs of access to a proper forum to resolve their dispute. In some cases, an arbitration agreement is unenforceable when the associated fees and costs “are so high” as to make arbitration impossible. But the judge said the plaintiffs failed to present any evidence that they could not afford arbitration in this case.

Speak with a New York Employment Discrimination Lawyer Today

You should always proceed with caution before signing any type of employment agreement or services contract that includes an arbitration clause. If you have questions or concerns about how such agreements may affect your legal rights, contact New York City employment law attorney Mahir S. Nisar today.

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