Do You Require Your Employees To Sign Arbitration Policies? Posted on Mar 06, 2017

Over the last 15 years, the cleantech industry has grown at a record pace creating a volatility in the industry. The solar industry’s ups and downs are famous, and this “solar-coaster ride” has some important implications. Cleantech companies experience dramatically high rates of employee turn over, implementing layoffs or reductions in force (RIFs), and, all too common, the need to shut the doors entirely.

Clean technology start-ups and small, local businesses, like solar installers, all face the same reality of having no balance sheet to fund expensive legal battles. Due to these factors, companies in the cleantech industry are especially vulnerable to legal disputes that might quickly drain their much needed cash reserves or divert time away from the core business. For this reason, companies in the cleantech industry, even more so than companies in other industries, need to make sure that they have legal protections in place to minimize and avoid expensive legal battles.

One easy way to take proactive legal action at a company to minimize risk is by implementing mandatory employee arbitration policies. These types of agreements not to sue are becoming a ubiquitous facet of employed life for the precise reason that they help prevent excessive legal expenses.

Mandatory arbitration generally refers to an arbitration agreement that an employer requires new hires or existing employees to sign as a condition of employment or of continued employment. When an employer requires employees to sign an arbitration agreement as a condition of employment, it is critically important that the agreement be enforceable under state law. If the terms of the mandatory arbitration agreement are not in compliance with state law, the company may not be able to compel arbitration.

As companies grow, so do their liabilities. To proactively put in place a mandatory arbitration policy before any disputes arise is like buying insurance for the business.