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Can dispute resolution clauses prevent employee litigation?

You want to ensure that your employees have what they need to do their job well, and you want them to be loyal to your Colorado business. You definitely don't want disgruntled employees who will file frivolous lawsuits, wasting your time and money and putting your company's good reputation at risk. Although you cannot keep everyone happy all the time, you can make it difficult for an employee to take you to court over an issue that you could have resolved, had you been given the chance.

The American Arbitration Association explains that you can include an alternative dispute resolution clause in your employment contracts. Any or all of these three ADR methods may be right for your company:


A negotiation clause requires a good-faith attempt from you and the employee to reach a solution that you both can accept. The outcome of the negotiation is not necessarily binding. You may want to place a time limit on the negotiation process so that, if you do not come to an agreement, you can move on to the next phase, which may be mediation or arbitration.


If you and your employee cannot reach an agreement through negotiation, you may want to bring in a mediator. This neutral third party can listen to both sides and facilitate a resolution. As with negotiation, your agreement may not be binding.


Rather than taking a disagreement before a judge for a decision, you could appear before an arbitrator to resolve the dispute. As in a court case, you and the employee would each present your evidence, and the decision of the arbitrator is binding. 

This information about ADR clauses in employment contracts is general in nature and should not be interpreted as legal advice.

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