It is evident from the case that Merlotte has an arbitration clause added to the handbook to settle all the disputes arising from employment by binding arbitration. Merlotte advised its employees of the changes to the policy and got the wavers signed by all the employees. Bill Compton has signed the form and continued work at Merlotte. Agreement to arbitration is clear when an employee signs an application from or agreement requiring arbitration. Some jurisdictions will infer an employee’s agreement to arbitrate if the employee continues to work for the firm after receiving notice of the company’s policy requiring all employees to arbitrate their claims (Bagley & Savage, 2006, p. 145). Therefore Bill Compton is bound by the arbitration agreement and cannot sue the company directly. The court must direct Bill to first arbitrate his claims of unfair dismissal, as per the agreement.
However, after the completion of arbitration process, post-hearing if Bill feels that the arbitration award is unconscionable then he can approach the court. There is a possibility that the court might set aside arbitrator’s decision if it was ‘arbitrary and capricious’ (Bagley & Savage, 2006, p. 151). The FAA list only four circumstances in which an arbitration award may be set aside by the court: (1) the award was procured by corruption, fraud, or undue means; (2) the arbitrator was demonstrably impartial or corrupt; (3) the arbitrator engaged in misconduct by refusing to postpone the hearing when given sufficient reason or by refusing to hear pertinent evidence; and (4) the arbitrator exceeded his or her powers or executed them so badly that a final award on the issue put to arbitration was not made (Bagley & Savage, 2006, p. 150).
Pros of arbitration
1. Arbitration is usually cheaper and faster than litigation. It will cost money and time for Bill. A well-drafted arbitration clause can help the parties avoid the lengthy, complicated process of trail made (Bagley &...