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Enforceability of Arbitration Clauses


Companies employing skilled labor such as doctors, engineers, and architects frequently include arbitration clauses in their employment agreements. The benefit to the employer is that arbitration is typically less expensive and lengthy than the normal litigation process. It also allows the employer to have a say in who decides the outcome of the case. For the employee, there may be little to no benefit and it could be detrimental. Consequently, if you find yourself in a dispute with an employer attempting to enforce an arbitration clause, you should contact a knowledgeable civil litigation lawyer. The Raleigh attorneys of Maginnis Law can assist you by reviewing your employment agreement to determine if a particular dispute is subject to the arbitration clause. To speak with a civil attorney, call the firm at 919.526.0450 or 919.480.8526.

In civil litigation, Defendants typically have significant leverage and bargaining power because they have more assets and ability to pay for attorneys, experts, and court costs than does the Plaintiff. In certain disputes involving a contingency fee, the leverage shifts to the Plaintiff. For example, many attorneys, including Maginnis Law, take North Carolina Wage and Hour claims on a contingency basis. In these cases, the Plaintiff may have more leverage because the Defendant is being forced to pay an hourly attorney fee to defend the case and the Plaintiff is not. Therefore, Defendants are incentivized to settle sooner rather than later. Arbitration can eliminate this leverage because the attorneys’ fees are not as significant due to the simplified process. This begs the question, when and how are arbitration clauses enforceable in employment contracts? This was recently addressed in the North Carolina Court of Appeals case Fontana v. Southeast Anesthesiology Consultants, P.A., et al.

In Fontana, a physician was suing his employer for breach of an employment agreement, and a number of torts, including fraud, constructive fraud, unfair and deceptive trade practices, breach of fiduciary duty, and negligent misrepresentation. After Dr. Fontana filed his lawsuit, the Defendants moved to stay the litigation and compel arbitration. The Court noted that “determining whether a dispute is subject to an arbitration agreement involves ‘a two-part inquiry: (1) whether the parties had a valid agreement to arbitrate, and also (2) whether the specific dispute falls within the substantive scope of that agreement.’” In that particular case, the arbitration clause was drafted so as to only include disputes regarding termination. The Court found that only the breach of employment agreement fell within the arbitration clause. Therefore, Dr. Fontana was allowed to proceed to litigate all of his claims but that one.

As illustrated by Fontana, arbitration clauses are not always as clearly enforceable as an employer/defendant may hope. If you have a potential claim against an employer, builder, or any other party that may choose to include an arbitration clause in a contract, call the Raleigh civil litigation attorneys of Maginnis Law. Our knowledgeable North Carolina lawyers can either assist you through the arbitration process or, if beneficial, attempt to overcome the arbitration clause.

Maginnis Law regularly represents clients in the Triangle area, including Raleigh, Durham, Chapel Hill, Cary, Morrisville, Wake Forest, Apex, and Garner. For a discussion with one of our arbitration attorneys, call the firm at 919.526.0450 or 919.480.8526. You can also send a confidential email to an arbitration lawyer utilizing our contact page. All consultations are offered free of charge.